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Container Freight Station Owners To Lose Sh35B Investment In SGR’s Cargo Debacle.

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A cargo ship docks at the port in Mombasa.

Across the world, rail transport dynamics are essentially market-driven, with the customer, and in the SGR case the cargo owners, having a major input. But the Kenya government last month directed that all imports coming in through the Mombasa port be transported by the SGR, setting off a round of protests from businesses.

Manufacturers, who make up a substantial number of the cargo business clientele, have also noted that outside of the storage costs, the train’s ability to move bulk freight is limited. One of the main challenges they have is that the current line does not have the capacity to haul bulk cargo which disadvantages us. They are also at a disadvantage, especially that the last mile element is missing. The old meter gauge line offered direct access to heavy clients’ bulk cargo.

At the port, CFS owners and the clearing and forwarding agents, say such orders will kill their business, as importers will have to liaise with new service providers to access the Embakasi ICD.

The authority’s mandate is to maintain, operate, improve and regulate all scheduled seaports situated along the inland container depots. KPA a statutory corp was created under section 3 of KPA act ( cap 391, Laws of Kenya ) and was established on 20th January 1978. Over the years capacity constraints at the port of MSA have been a major hurdle in ports operation as cargo imports have always surpassed yard holding capacity against the backdrop of poor cargo offtake to the hinterland.

The CFS( Container Freight Station) came into operation a decade ago in a bid to ease congestion at Mombasa port, which saw ships charged for delayed cargo deliveries, and these costs passed on to clients.

A freight station in Mombasa.

Traditionally, importers negotiate with clearing agents to get at least a month of free storage of their cargo and this is what KPA and Kenya Railways need to address to attract the much-needed cargo. Within the KPA system, storage is a very expensive affair. For instance, the fine for a 20-day storage within the port is $2,100. You cannot attract importers by dangling cheap freight charges, then force them to pay high storage charges. It doesn’t make business sense.

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CFS business is made on volumes moved from port to customers’ premises and that is why the government directive is hitting their bottom line hard. They attract clients by not only charging less for storage but also giving incentives. It is seamless when they work with clearing agents and it is this wholesome package that endears clients to them.

The investment of setting up a CFS is huge and applicants went through a tedious vetting process to comply with statutory requirements. Requirements are Minimum yard capacity of 4000 TEUs full cabro paved, standard perimeter wall required by KRA which we estimate the land size as 10 acres n above.

The modern facilities built by CFS operators have equipped modern office blocks for staff and resident government agencies and public amenities minimum four dedicated equipment for handling containers. The reach stackers of repute make, certified and locally inspected as required by authorities cost each ksh 75M, thats Sh300M investment. High massive masts for lights, security systems is a must requirement and must be handed over to KRA officers who are custodians of cargo at CFS and control entry and exit gates.

Also must comply with KRA requirement in relation to bonding, good in transit bond, warehousing, transit and security insurance among other translating to over ksh 15M annually. All the investments highlighted above over 1.6 billion. Its a cost each CFS paid to operate

All the CFS ‘ invested in trucking business to shunt containers from KPA within 48hrs as specified in the contract and take cargo xhook from vessel to allow quicker vessel turn around. Must invest in the communication system, control of documents through electronic data interchange (EDI) which puts all stakeholders handling cargo in the same wavelength and track info thru shared platform.

Truck loaded with a container at Nairobi Inland Container Deport.

Combined, CFS has employed 8000 directly and in existing contracts with suppliers for their machines, office supplies, consultants, training institutions, security companies, cargo surveyors, cargo insurers among others. There are 22 gazetted CFS currently and are registered with KPA and are regulated by government agencies namely KPA, KRA, KMA.

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CFS ‘ as an extension of port with public authority status, equipped with state of the art facility and equipment offers services of handling cargo, temporary storage of import, export loose cargo, motor vehicle, project cargo all carried and operated under customs control. In additional CSR programs initiated by CFS’ including Scholarships, Internship programs, Built rehab centers, Support orphanage homes, Engaging locals teens & support their Football and other games are now all at stake should this business fail to materialize as it stands.

Most progressive countries give tax holidays and other incentives to their local investors yet we are killing ours. The MD of KPA advised the government on the need for CFS but they tried to use force but in only two days the yard at the ICD was full. The ripple effects of killing such an industry that me livelihoods depend on is inhuman.

Talking of which, I can’t help but empathize with CFS investors many of whom I suspect took loans to own the Sh1.6B setup capital. How are the 22 gazetted stations going to service their loans? I think the SGR cargo debacle would’ve been avoidable of authorities engaged and consulted all stakeholders in the industry to avoid these inconveniences and I believe its never too late.


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Kenya West is a trained investigative independent journalist and a socio-political commentator on matters Kenya and Africa. Send me tips to [[email protected]]

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With Sh2B Investment, Taaleri Set To Purchase 20 Per Cent Of Cytonn Real Estate Project

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Cytonn CEO Edwin Dande

On 8th November 2018, Cytonn held a client cocktail meeting at the Nairobi Serena Hotel. The forum served as a platform to enable Cytonn celebrate the ongoing successful partnership with Taaleri, its institutional investor, while also providing an opportunity for Cytonn clients to interact directly with The Cytonn Board and Taaleri.

A section of attendees during the cocktail

“This forum is meant to celebrate the great milestone we have had in our relationship with Taaleri. It will be a platform to get to know what we are doing as Cytonn, The Board and Taaleri as well as get to respond to any questions our clients may have around the firm’s governance,” said Edwin H. Dande, Cytonn’s CEO during the forum.

Edwin H. Dande, Cytonn’s CEO

“With the continued attractive investment opportunity in Kenya and the region, and the committed team at Cytonn, Taaleri has this year invested a further Kshs. 2bn in our Real Estate projects, and are now looking to purchase 20% of Cytonn during our IPO,” said Prof. Daniel M. Njiru, Cytonn’s Board Chairman and Vice Chancellor at Embu University, during the forum.

Prof. Daniel M. Njiru, Cytonn Group’s Board Chairman

He further said that, “The listing of Cytonn will only serve to increase our levels of governance, risk management, disclosure and transparency. As a Board, we are supporting Management on the listing, and would like to congratulate them for taking the firm to these heights.”

Prof. Daniel M. Njiru also introduced members of the various Boards at Cytonn, which are The Cytonn Group Board, Cytonn Asset Managers Limited (CAML) Board, Cytonn Hospitality Board, the Special Purpose Vehicles (SPVs) Boards and The Cytonn Education Board.

A representation of The Cytonn Group, Affiliates and Special Purpose Vehicles (SPVs) Boards

Kati Salo, Taaleri Africa Team representative, reaffirmed the Cytonn – Taaleri partnership. “As a Risk Manager, I am confident about the risk position of the firm and I can sleep well knowing that my investments are in good hands,” she remarked.

Prof. Daniel M. Njiru engaging with a client

.

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Cytonn Opens Doors To The Public As They Unveil The Ridge Show House

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The Ridge.

If you are looking for something to do this weekend, CytonnInvestments is holding an open day on Saturday for clients and members of the public on site at The Ridge.

The show house for the project will be unveiled, giving guests a preview of what the finished product will be like. Visitors get to sample the distinct and magnificent lifestyle development and ask the management questions on any issues about Cytonn’s activities.

The event will run from 12 noon to 4 pm, so that clients have enough time to explore the site, view the show house, and interact with the management of Cytonn.

The Ridge.

Alongside the open day, the company is offering a 5% discount for early buyers, which will run for a limited time. Interested guests are advised to sign up and reserve their slots before spaces run out.

This project was made for people who want to live in luxury and style, at surprisingly affordable rates. The list of amenities goes on and on, but I think the best part about it is the location. Imagine living just a few minutes from Windsor Golf Club, Two Rivers Mall, UNEP headquarters, and only 10 km from town!

The luxury project will have 1,2,3 & 3 bedroom apartments withdomestic servants’ quarters (DSQ).

Just a few months ago, Cytonn handed over the Amara in Karen, another of its projects, which is currently 100% complete and sold, proving they have what it takes to deliver beautiful, exclusive homes that perceptive Kenyans can enjoy.

If you want to buy a home or to invest, this is your opportunity! You cannot afford to miss out. RSVP here.

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Cytonn and Taaleri of Finland Enhance Their Partnership via Agreement for Subscription of 20% Cytonn Stake

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Signing of agreement.

Cytonn Investments Management Plc (‘Cytonn’), the leading alternative investment management firm in the East African Region, has today entered into a transaction with its leading institutional partner, Taaleri of Finland, whereby Taaleri has acquired the option to subscribe for up to 20% of Cytonn. Upon consummation, the transaction enhances the Cytonn & Taaleri relationship beyond project finance to shareholding.

This will be the 5th time the Finnish firm will be investing with Cytonn, having already committed over Kshs 5.0 bn towards projects and investments with Cytonn, namely The Alma, The Ridge, Situ Village and Amara Ridge, which has already been delivered to homeowners. In addition to their investments, Taaleri has already successfully received back its investments from Amara Ridge and The Alma, underlining Cytonn’s commitment to deliver above-average returns in real estate for global institutional investors.

Taaleri is a financial group, whose parent company Taaleri Oyj’s shares are listed on the NASDAQ stock exchange. Taaleri manages investments worth Kshs 813 bn and provides funding in the capital-intensive real estate sector in Africa through two Africa dedicated real estate funds.

Speaking at the signing of the agreement, Edwin H. Dande, CEO of Cytonn Investments, noted that “We are thankful to Taaleri for the continued support they have shown to the Cytonn brand. This transaction is important for two reasons; first it affirms market confidence in our brand and unique business model, and second it provides a strong anchor investor as we prepare for our IPO, which we hope to complete next year, either at a local or global exchange. We have already engaged with two sets of transaction advisors, in Nairobi and London, to explore a local listing either at the Nairobi Securities Exchange, NSE, or a listing at the London Stock Exchange, LSE, respectively. The ultimate listing jurisdiction will depend on valuation, investor interest and ease of listing. We also hope to broaden our partnerships by bringing on board one additional local or global anchor institutional investor at the IPO.”

Related Content:  Cytonn and Taaleri of Finland Enhance Their Partnership via Agreement for Subscription of 20% Cytonn Stake

Speaking at the signing, Mr. Juhani Elomaa, CEO of Taaleri Group, who recently visited Cytonn’s real estate projects noted that “Taaleri and Cytonn are now in their fifth year of partnership, and Cytonn remains our trusted partner for deploying capital to the East African Region. Through Cytonn, Finnish Pension Funds and Investors have not only earned attractive returns that are not available in the developed markets, but we have contributed to growing the Kenyan economy, creating jobs, and driving the deepening of capital markets through structured finance transactions. The share options agreement for a 20% stake is an opportunity to deepen the relationship beyond project finance to shareholding.”

Cytonn Investments Management Plc is an independent investment management firm, with offices in Nairobi – Kenya and D.C. Metro – U.S.l and are primarily focused on offering alternative investment solutions to individual high net-worth investors, global and institutional investors and Kenyans in the diaspora interested in the high-growth East-African region. They currently have over Kshs 82.0 billion of investments and projects under mandate, mainly in real estate.

Cytonn Real Estate is Cytonn’s development affiliate, which is focused on developing institutional grade real estate targeted at specific institutional, high net-worth and Diaspora investors. Collective, Cytonn Investments and Cytonn Real Estate manage over Kshs 82.0 billion of real estate projects.


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