Kenya News

Foreigners have sold NSE stocks worth Sh2.3 billion in the past three months, according to new market data. Despite improvements in local equities, foreign investors continued to withdraw from the Nairobi Securities Exchange in the first quarter of this year.

Data reveals that foreign portfolio flows were negative throughout the three months, with the largest sell-off occurring in March at Sh1.2 billion. In January and February, investors withdrew Sh106 million and Sh1 billion from the market, respectively.

This trend persisted despite positive factors such as gains in the domestic exchange rate and improved investor sentiment following the partial redemption of Kenya’s debut $2 billion (Sh264.85 billion) Eurobond. The ongoing departure of foreigners remains a puzzle, considering the NSE has delivered gains to investors since the beginning of the year.

Investor wealth at the bourse has surged by Sh327 billion since January 2, 2024, with the Nairobi all-share index increasing by 22.7 percent to 113.09 from 92.11 points on December 29, 2023. According to Muathi Kilonzo, head of Equities at EFG Hermes Kenya, foreign investors have been actively trading amongst themselves, with some who were previously unable to exit due to foreign exchange constraints now leaving the market to mirror the selling position.

BlackRock, the world’s largest asset management firm, recently re-entered the NSE after a four-year hiatus, signalling a renewed interest in the market. Despite the negative foreign portfolio flows, the NSE has shown positive momentum in the first quarter. Liberty Kenya Holdings has led a market rally, with its stock price climbing 48.5 percent to Sh5.48 by March 28.

Other notable gainers include Equity Group, up 40.1 percent to Sh47.15, and Co-operative Bank, up 31.5 percent to Sh15. On the flip side, Home Africa has recorded a year-to-date loss of 18.9 percent, trading at 30 cents from 37 cents at the end of last year. Several other stocks, including Kakuzi Plc, BK Group, Express Kenya, Longhorn Publishers, Nairobi Business Ventures, and Unga Group, have also experienced losses.

Despite the stock market’s double-digit gains, analysts are cautious about labelling the rally a bull run, which typically signifies a prolonged period of rising stock prices and positive investor sentiments.

Oil marketers are anticipating increased profits as Epra begins a crucial review that will determine new costs for the next five years.

The Energy and Petroleum Regulatory Authority recently awarded Kurrent Technologies the tender to conduct the Cost of Service Study in the Supply of Petroleum Products for Sh29.3 million.

The study aims to assess the running costs incurred by oil marketing companies and gather insights from industry stakeholders on incurred costs against the backdrop of changing local and global oil landscapes. This study will analyze shifts in the fuel supply chain from importation to distribution over the last five years.

Following the previous COSSOP conducted in 2018, which resulted in set profit margins for oil marketing companies, the sector has been advocating for a review due to rising fuel prices and costs.

While the Petroleum Institute of East Africa was unavailable for comment, other industry groups are gearing up to provide input for the new study, focusing on advocating for higher profit margins to align with current costs. Martin Chomba, chairman of the Petroleum Outlets Association of Kenya, confirmed preparations for recommendations on new margins in response to the impending review.

Private companies in Kenya are set to venture into the electricity distribution sector and will be allowed to import power from neighbouring countries for local resale. This move, proposed by the Energy and Petroleum Regulatory Authority (Epra), aims to enhance competition, drive down wholesale tariffs, and improve service delivery to consumers. By expanding choices for power distributors, it is expected to intensify competition on wholesale tariffs, leading to potential reductions in power costs for consumers.

Currently, only Kenya Power has the authority to engage in electricity import agreements with foreign producers. However, under the draft EnerPrivate firms to import electricity for resale locally Electric Power Undertaking Licensing Regulations, 2024, new entrants can apply for licenses to import electricity for resale domestically or export power to other nations. This regulatory framework also requires firms to obtain approval for the tariffs they intend to charge consumers.

The government is offering various licenses to new players in the electricity sector, including those for electricity generation, transmission infrastructure operation, and retail supply for billing and revenue collection.

The draft regulations signify a shift towards breaking Kenya Power’s long-standing monopoly by allowing firms to utilize the distribution and transmission networks of Ketraco and Kenya Power. Nonetheless, these new entrants will be subject to wheeling charges for using the transmission system. Proposed regulations also stipulate that license renewals must be applied for at least three years before expiry.

The draft regulations, pending adoption by Parliament, aim to enhance competition in the sector and provide more options for consumers in Kenya’s evolving electricity market.

The Kenyan government has acquired a series of Springbuck armoured personnel carriers from DCD Protected Mobility. The first fleet of these advanced vehicles was inaugurated and deployed on Wednesday, March 20, 2024, by Kithure Kindiki, the Minister of Interior and Secretary of the Cabinet for Interior and National Administration, marking the start of Operation Maliza Uhalifu.

This purchase is a key part of Kenya’s broader strategy to improve its defensive posture against terrorism, banditry, and organized crime. The Springbuck vehicles are distinguished by their robust construction and superior protection capabilities, providing essential security for personnel engaged in combat.

The unveiling event was attended by senior officials, including Principal Secretary Dr. Raymond Omollo, and Inspector General of the National Police Service Japhet Koome, among others, emphasizing the government’s firm stance in combating threats to national peace and security.

The Springbuck is a South African armoured personnel carrier. Equipped with a 6-cylinder MWM 6.12 TCA turbo diesel intercooled engine, capable of producing 286 horsepower and 782 lb-ft of torque. Its 5-speed automatic transmission Allison 3000SP and two-speed transfer case for high and low ranges enhance its ability to manoeuvre in various conditions.

It has an acceleration from 0 to 48 km/h in 15 seconds and the capability to climb maximum slopes of 35 degrees. Its ability to tackle side slopes up to 22 degrees and a range of 600 km allows it to navigate long distances without frequent refuelling. The Springbuck can operate in temperatures ranging from -8°C to 50°C, ensuring its reliability in extreme environments.

The design of the Springbuck places particular emphasis on crew protection. It can be equipped with additional armour to achieve a ballistic protection level up to STANAG level 3. Its V-shaped hull protects against explosions, while various fire protection options are available to further secure the cabin and engine compartment. The vehicle also offers a weapons platform, which can be equipped with remote or manual weapon stations.

The Springbuck’s payload capacity is 2,000 kg, with a total gross vehicle weight of 13,500 kg. It is equipped with 14.00R20 wheels with steel rims and standard run-flat inserts, ensuring its mobility even in the most difficult conditions. Its pneumatic dual-circuit braking systems, with disc brakes on all wheels and ABS, ensure increased safety during movement.

The robust suspension of the Springbuck, consisting of semi-elliptical leaf springs and telescopic double-acting shock absorbers, gives it great stability and load capacity. Manoeuvrability is facilitated by power-assisted steering, and the vehicle includes lifting and tie-down points for transport.

The interior configuration options offer standard seating for 11 people, including the driver and commander, plus secure storage spaces for equipment. Cabin access is possible via two side doors, one rear door, and one roof hatch, depending on the configuration. For maintenance, the Springbuck is designed with platform-type fenders and bumper providing easy access to the engine compartment, thus emphasizing the focus on functionality and operational efficiency.

Over the past six months, the Kenyan government has allocated 7.6 billion Ksh and plans to invest an additional 29.4 billion Ksh over the next three years in the Police Equipment Modernisation (PEM) program. This initiative aims to provide the police with modern equipment and mobility solutions such as armoured personnel carriers (APC), mine-resistant ambush-protected vehicles (MRAP), unmanned aerial vehicles (UAV), drones, attack helicopters, mine sweepers, personal protective equipment, focusing on the safety of frontline officers.

Historically, the Kenyan Defence Forces have accumulated a diverse fleet of armoured vehicles. In 2021, the Ministry of Defence purchased 118 Hizir armoured vehicles for 7.7 billion Sh ($69 million) from Katmerciler, a decision made after evaluating proposals from competitors in South Africa and North America.

Furthermore, the Kenyan Defence Forces (KDF) troops serving in Somalia as part of the African Transition Mission in Somalia (ATMIS) have been equipped with six Guardian Xtream 4×4 armoured personnel carriers from the International Armoured Group (IAG), originating from the United Arab Emirates, demonstrating Kenya’s commitment to securing its forces and the nation against external threats.

Millions of existing Kenya Power customers will be tied to the power utility indefinitely despite the State opening up the electricity distribution market to other firms.

The Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2024 have barred the existing Kenya Power customers from decamping to other firms set to enter the electricity distribution space.

Energy Cabinet Secretary Davis Chirchir gazetted the regulations last month, as the State moves to end the monopoly that the power distributor has enjoyed for decades.

The regulations say that existing Kenya Power customers will not be allowed to enter deals with the other distributors, in clauses that silently protect the utility firm from customer defections en masse.

Additionally, the regulations have not prescribed a transmission period upon which Kenya Power customers will be able to decamp.

“Subject to section 145(4) of the Act, a licensee may supply a consumer provided that the said consumer has no existing contract for supply of electrical energy with any other licensee,” the draft regulations read in part.

“Subject to section 145(4) of the Act, a consumer shall choose his retail supplier provided that the said consumer shall not have two supply contracts for the same premises.”

The clauses mean that the over 9.2 million homes and businesses will be stuck with the State-owned power distributor for years, with official records showing that customers are staying in the dark for about 115.73 hours annually.

It remains unclear whether Mr Chirchir will make changes to the particular clauses and introduce a transition period for existing Kenya Power customers to opt for the new distributors.

There have been fears that opening up electricity distribution to other players would lead to huge defections by disgruntled customers.

Frequent outages in addition to costly bills are fueling a sharp rise in the number of potential and existing customers opting for alternative electricity sources, mainly solar and biomass.

Big firms such as Kenya Breweries, Bamburi Cement, Carbacid Investments, Africa Logistics Properties, and Mombasa International Airport are some of the leading electricity consumers who have put up alternative electricity sources.

Wealthy homes are also putting up solar systems in a bid to end reliance on Kenya Power’s supply besides cutting bills.

Power transmission
Under the regulations, Kenya Power and the Kenya Electricity Transmission Company (Ketraco) will allow other firms to use their transmission and distribution networks to transmit electricity to consumers, upon payment of wheeling charges.

“A transmission or distribution licensee shall provide non-discriminatory open access to its transmission or distribution system as the case may be for use by any licensee or eligible consumer upon payment of wheeling or use of system charges,” say the regulations.

Wheeling charges refer to the money paid to a system owner (in this case Kenya Power and Ketraco) by other firms who wish to use the system to transmit electricity.

Opening up the electricity market means that power generators, that is KenGen and independent power producers (IPPs), will also have the option of selling their electricity to distributors other than Kenya Power.

Building an electricity transmission network is capital intensive and the open access concept is set to ease entry of firms that have for years been keen to enter the power distribution fray.

The regulations come five years after Kenya enacted into law the Energy Act, 2019 that opened up the country’s electricity distribution to competition.

Kenya Power had 9.2 million customers as of June last year, but the period marked the slowest rate of customer additions at 318,217.

The State electricity distributor has previously raised concerns about the rising number of customers, especially the big consumers like industries shifting to solar power systems.

Kenya has defied a global funding drought for budding companies to post a 17 percent increase in new start-up investments, toppling Nigeria and Egypt as the continent’s largest destination for start-up financing.

In 2023, 62 Kenyan start-ups raised an estimated $673.78 million from local and international investors, a rise from the $574.8 million raised in 2022, even as the rest of the continent saw a drop in funding, data by start-up research organisation, Disrupt Africa shows.

Nigeria and Egypt, which dominated the start-up funding space in Africa over the past decade, 2023 recorded a drop, which resulted from a global slowdown in investments due to a cocktail of macroeconomic challenges across the world.

“Unlike elsewhere on the continent, Kenya’s total funding is up,” said the report published this week. “Kenya had an overall positive year in 2023, with its total amount of funding rising on 2022 levels, although the number of start-ups to secure funding was down like most other destinations.”

In Kenya, most of the funding raised last year went to energy start-ups, with off-grid solar pay-as-you-go firms M-Kopa and Sun King raising $465 million, or 69 percent of the start-up funding received.

Sixteen of the companies were fintechs, nine were e-commerce businesses, seven were agri-tech, and five were in health-tech and logistics technology.

“Though the number of start-ups to raise funding in 2023 was down, Kenya nonetheless bucked pan-African trends with the total amount of funding growing, as well as the level of employment created by the start-up ecosystem.”

Twenty-five, or 36 percent, of the 69 start-ups raised at least $1 million last year, a drop from 49 in 2022, but still a higher proportion than in other countries on the continent.

In Africa, the number of funded start-ups dropped from 633 in 2022 to 406 last year, with the total amount raised dropping 28 percent to $2.4 billion, from $3.3 billion the previous year.

Of the four African countries that have traditionally dominated start-up funding on the continent, two saw a drop.

Nigeria’s total investments shrank almost three times from $976 million in 2022 to $399.9 million last year.

Egypt’s start-up investments also dropped from $811 million to $590 million in that period, while South Africa’s rose to $512 million, from $329 million in 2022.

The tracked funding for Africa came from different sources, with venture capital, development financial institutions and angel investors, injecting mostly equity investments (89 percent), and a few debt investments (11 percent).

“The perceived risk of African tech start-up investments means companies remain much more likely to raise equity capital, but later-stage start-ups, especially those in the energy sector, are increasingly able to take on debt funding, and this year, in particular, some earlier-stage ventures have taken on debt as bridging capital as VC funding declines,” says the report.

Disrupt Africa tracks funding for African start-ups, and where funding amounts are not publicly disclosed, it uses estimates based on the funding institution’s standards or history of funding, or hints given by the recipient, meaning the estimated values could be slightly lower or higher than the actual.

The African Venture Capital Association (AVCA), which publishes an annual report of venture capital activity on the continent, is yet to publish the 2023 results, but all indications are that even VC funding generally saw a drop last year.

In Africa, the number of funded start-ups dropped from 633 in 2022 to 406 last year, with the total amount raised dropping 28 percent to $2.4 billion, from $3.3 billion the previous year.

Kenya’s government says it is committed to building the economy by increasing revenue collection, reducing government spending, and ensuring the country can repay its debt and live within its means.

The government announcement comes days after the African Development Bank, in its outlook report for 2024, said many nations continue to grapple with higher commodity prices, citing weak domestic currencies and slow economic activities in countries that import more than they export.

The financial institution warned that the high cost of essential food items in some African countries like Angola, Ethiopia, Kenya, and Nigeria will likely cause civil unrest.

Speaking to journalists Wednesday, Kenyan President William Ruto said his government has done just enough to reduce the economic burden on Kenyans.

“The strategy we have put in place over the last year has seen the cost of living come down, whether you talk about the cost of food, whether you talk about inflation, and what we have done with the management of the debt situation in the country,” he said.

Ruto blamed the previous government for burdening the country with foreign debt and failing to collect enough revenue to balance the country’s accounts.

The government removed fuel subsidies which were meant to cushion Kenyans from the high prices of food as part of its economic reform agenda. That reform, the African Development Bank said, could cause unrest.

According to AfDB research, 19 African countries recorded double-digit inflation rates last year. Earlier this month, The Central Bank of Kenya’s Monetary Policy Committee warned citizens to brace for high food prices due to soaring inflation and expensive imports because of the depreciation of the local currency.

Kenya has also witnessed protests over high food prices, but people continue to express their displeasure with the country’s economic status in public gatherings and on social media networks.

Samuel Nyandemo, economics lecturer at the University of Nairobi, says some Kenyans are losing patience with Ruto’s 18-month-old government.

“Kenyans, their patience is eroding unless some of these issues are addressed with urgency. There will be some animosity whether you like it or not,” Nyandemo said. “You can even see it in political meetings. People are now so courageous they are shouting at the president. What does that show you? It shows you that people are getting disgusted. We better start addressing key issues first and the first thing is reducing the cost of living.”

Kenya’s government says it has managed to lower food prices, and the economy is improving despite spending much of its revenue repaying loans.

Ruto says Kenya needs to reduce its reliance on food imports to strengthen the currency and reduce food prices.

“The 500 billion Kenya shilling we spend every year to import food into Kenya will only go down the day we produce that food in Kenya. That’s a step we are taking and we made a commitment as a government that we want to reduce imports by 50 percent in the next five years,” he said.

Nyandemo the economist says the shilling’s loss of value against the dollar and other currencies will impact the country’s food prices and economy.

“All macroeconomic valuables have shown red lights. We should not be fooled that the shilling is going to stabilize soon. A shilling cannot stabilize because of some mischievousness through the Euro bond,” Nyandemo said. “I think it is a short-lived phenomenon. And as long as the shilling is not going to be stable, as long as the interest rates are going to be very high, businessmen are not going to be able to source loans for investments. In any case, you can see from the Kenya Revenue Authority the revenue being collected is not in line with the targets.”

Africa’s economic growth is expected to grow at 3.2 percent. The African Development Bank urged African countries to build resilience in a world of rising uncertainty and geopolitical competition.

Kenya has exempted passport holders from South Africa and six other countries from paying an unpopular entry fee introduced last month.

The government scrapped visa requirements for all foreign passport holders last month.

The move was seen as an attempt to promote Kenya as a tourist destination and to attract business travellers.

But a $30 (£23) entry fee was introduced, including for some visitors who previously did not require visas.

The decision caused a huge backlash, with critics saying that it could lead to countries with which Kenya has visa-waiver agreements introducing a similar fee, making travel more costly and bureaucratic.

Only travellers from the East African Community (EAC) regional bloc were exempt from paying the money.

In addition to South Africa, the exemption has been extended to passport holders from five other African states – Ethiopia, Eritrea, Congo-Brazzaville, Comoros and Mozambique.

San Marino, Europe’s third-smallest nation, is the only other country on the exemption list.

A memorandum from Kenya’s interior ministry and immigration department said the exempted countries had entered “visa abolition agreements or signed bilateral visa waiver agreements” with the East African state.

However, travellers from these countries would still need to get an electronic travel authorisation (ETA) document in advance to enter Kenya, and submit information such as flight details and proof of accommodation.

The ETA is for single entry and is valid for 90 days.

Kenya Electricity Generating Co. Ltd. (KenGen), a state-owned enterprise, said Monday that its hydropower stations have recorded a peak output of more than 471 MW due to rising water levels at its dams.

Peter Njenga, chief executive officer of KenGen, said that the country’s main dams in the Seven Forks Cascade have recorded one of the highest water levels in the recent past.

“The impressive performance on the hydropower side of the business has largely been driven by Masinga Dam, which is Kenya’s largest, maintaining near maximum water levels of 1,056 meters above sea level, over the last three days,” Njenga said in a statement issued in Nairobi, the capital of Kenya.

He believed that reliance on hydropower would stabilize Kenya’s grid-scale electricity costs.

KenGen has an installed generation capacity of 1,904 MW, of which more than 86 percent is drawn from green sources such as hydro, geothermal and wind.

Njenga noted that its power stations have been receiving good water inflows from the Mount Kenya and Aberdares catchment areas, which has led to high water levels at its dams.