Connect with us

Business

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

Published

on

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.

Related Content:  World Bank Says Kenya's Economic Growth For The Year, Slowest In Five Years, And What This Mean For The 2018 Entrepreneurs

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.

Related Content:  Cost of Corruption, American Company Dumps Kenya for Uganda after Sh5Billion Loss in Fraud

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.


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram

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

Continue Reading
Advertisement

Business

Former Nairobi Deputy Governor Polycarp Igathe Named The New MD Of Equity Bank Kenya Ltd

Published

on

Polycarp Igathe And James Mwangi

Nairobi 20th September 2018………Fives months after joining Equity Group Holdings Plc, Polycarp has been confirmed and named the Managing Director of Equity Bank Kenya. This marks the completion of the Group’s strategy of separating the management of its subsidiaries from that of the Holding Company. Dr James Mwangi will now serve as the Group Chief Executive and Managing Director providing overall strategic direction and oversight to the Group.

Speaking while making the announcement, Dr Mwangi said “The Board has completed the process of separating the operations and management of the Kenya subsidiary from that of the Group and appointed Polycarp the Managing Director of Equity Bank Kenya. Polycarp’s strong values and passion have enabled him to quickly fit well in the Equity Group organizational culture. He has distinguished himself as a results oriented and committed business leader who is Equity Bank is currently the largest bank in Eastern and Central Africa region with over 12.6Million customers, the largest in market capitalization and the second largest in balance sheet.

It is listed at the Nairobi securities exchange and cross listed in Uganda Stock Exchange and Rwanda Stock Exchange. It has banking subsidiaries in Kenya, Uganda, Tanzania, Rwanda, South Sudan and DRC. renowned for fostering productive partnerships with external stakeholders and customers, resulting in delivery of outstanding company results. He has taken over a very successful subsidiary and market leader. We believe he has the skills, competence, capability and vision to retain Equity Bank Kenya in its leadership position while taking it to the next level.”

Related Content:  The Cry Of An Imperial Bank Depositor To CBK Governor Patrick Njoroge

Equity Bank Kenya holds the lion share of the Group’s business and contributes over 80% of the profitability. It is the first subsidiary of Equity Group Holdings Plc which has become a case study of excellence in growth management and transformation from a technically insolvent building society to a globally competitive bank. The Bank has been named the Top Banking Superbrand in Kenya for ten years in a row since 2007.

Moody’s gave the bank a global rating of B2 with a Stable outlook same as the sovereign rating of the Kenya Government in 2017. Global Credit Rating Co. (GCR) rated the bank AA- for long-term and A1+ for short term, with a stable outlook reflecting the Group’s strong competitive position in Kenya’s banking industry in 2017-2018. The Banker Top 1000 World Banks 2018 ranked Equity Bank position 11 globally on Return on Assets, position 44 on Profits on Capital and position 35 on soundness or Capital Assets Ratio.

In 2018, The bank was recognized by the Banker Awards East Africa as the Best Commercial Bank in Kenya and East Africa, the bank with the Best Digital Offering in East Africa and the Most Innovative Bank in Kenya. The East African Business Council awarded Equity Group Holdings the Overall Best Regional Company in East Africa, 2018. The African Banker Awards 2018 feted Equity Bank as the African Bank of the Year while Euromoney awarded Equity Bank as the Best Bank in Kenya 2018.

In Kenya, the bank emerged the Overall Best Bank in the 2018 Think Business Banking Awards for the 7th year in a row. It also won across 22 award categories becoming the most recognized market leader in the country.

Related Content:  Fidelity Bank With Sh.217B Assets Base Acquired By SBM Holding Group of Mauritius

Kenya led in the implementation of the Group’s digitization strategy that has seen the bank move over 97% of its transactions from the banking halls to self service digital banking tools. The bank pioneered in rolling out agency banking in the region, setting the pace for the other subsidiaries. The Group’s social impact investments coordinated by Equity Group Foundation have benefitted immensely from Equity Bank Kenya’s infrastructure which provides the Foundation with unrivalled implementation capability giving the Foundation a high return on investment.

About Polycarp Igathe

Mr Igathe is a highly accomplished corporate executive, seasoned in overseeing large commercial enterprises in the Fast-Moving Consumer Goods (FMCG) sector and with a remarkable track record of success in spearheading business growth and product development. Mr. Igathe has successfully served as CEO of leading blue chip corporate entities in Kenya and Eastern Africa, namely Coca-Cola SABCO, Africa Online, EABL, Haco Industries, Wines of the World, Tiger Brands International and Vivo Energy.

He has been elected, nominated, and appointed to serve as Non-Executive Chairman and Board member in several commercial and public-sector entities. Further, he has served as Chairman Kenya Association of Manufacturers (KAM); Chairman Petroleum Institute of East Africa (PIEA); Director & Trustee Kenya Private Sector Alliance (KEPSA); and Chair Board of Management at BG Ngandu Girls High School.

Igathe has served as Chairman Kenya Association of Manufacturers (KAM); Chairman Petroleum Institute of East Africa (PIEA); Director & Trustee of the Kenya Private Sector Alliance (KEPSA) and was the immediate former second Governor of the Nairobi City County. He brings his business networks and experience in the Eastern Africa private sector scene to grow the Equity brand in the corporate segment of the market.

Related Content:  World Bank Says Kenya's Economic Growth For The Year, Slowest In Five Years, And What This Mean For The 2018 Entrepreneurs

Igathe is celebrated as a Warrior of the Marketing Society of Kenya (MSK), Savant of Marketing by Marketing Africa Magazine and as Savant of Policy Advocacy by the Kenya Association of Manufacturers (KAM). Igathe obtained a Bachelor of Arts degree in Economics & Sociology, from the University of Nairobi and is a graduate of the Strathmore University’s Advanced Management Program (AMP) with IESE Business School in Spain. At the University of Nairobi, he was the national Chairman of AIESEC in Kenya, the International Association of university students interested in Economics and Business Management.
He was the second Deputy Governor of Nairobi County, under the devolved government before his resignation from the post in January 2018.


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
Continue Reading

Business

CBK Fines Standard Chartered Bank, Equity, KCB, Co-operative Bank and Diamond Trust Bank Kenya Sh392M For Laundering NYS Loot

Published

on

The Central Bank of Kenya (CBK) has, with other investigative agencies, been investigating banks that were used by persons suspected of transacting illegally with the National Youth Service (NYS). This followed the serious concerns that came to light in May 2018, related to the channelling of NYS funds.

CBK has announced  the conclusion of the first phase of the investigation of the banks that were used by these persons in transacting the NYS funds. The investigations prioritised banks that handled the largest flows, namely; Standard Chartered Bank Kenya Ltd, Equity Bank Kenya Ltd, KCB Bank Kenya Ltd, Co-operative Bank of Kenya Ltd, and Diamond Trust Bank Kenya Ltd.

The main objective of the investigations was to examine the operations of the NYS-related bank accounts and transactions, and in each instance assess the bank’s compliance with the requirements of Kenya’s Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) laws and regulations. Violations were identified, principally related to the following:
 failure to report large cash transactions,
 failure to undertake adequate customer due diligence,
 lack of supporting documentation for large transactions, and
 lapses in the reporting of Suspicious Transaction Reports (STRs) to the Financial
Reporting Centre (FRC).

CBK assessed monetary penalties for each of the five banks in accordance with the extent of the violations that were identified and pursuant to CBK’s powers under the Banking Act and the Central Bank of Kenya Act. These penalties are detailed below.

  1. Standard Chartered Bank Kenya Ltd who received Sh1.6B fined Sh 77.5M.
  2. Equity Bank Kenya Ltd. Handled Sh886M, fines Sh89.5M
  3. KCB Bank Kenya Ltd. Handled Sh639M and fined Sh149.5M
  4. Co-operative Bank Kenya Ltd. Handled Sh263M and fined Sh20M
  5. Diamond Trust Bank Kenya Ltd. handled Sh162M and fined Sh56M.
Related Content:  Cost of Corruption, American Company Dumps Kenya for Uganda after Sh5Billion Loss in Fraud

The second phase of the investigations will involve use of these findings by other investigators, inter alia, assessment of criminal culpability by the Directorate of Criminal Investigations (DCI) and the Office of the Director of Public Prosecution (ODPP). CBK has shared the findings with the relevant investigative agencies for their appropriate action. Further, an additional set of banks will also be identified and investigated.


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
Continue Reading

Business

Britam Vs Cytonn Investments Is It A Case Of Business Rivalry

Published

on

Cytonn CEO Edwin Dande

Justice John Mativo’s ruling today to have the case between Britam and it’s former executives to go on full trial, marks the start of a battle that has been floating in the courts since 2016 and one of the biggest corporate battles given that both are investment companies.

British-American Investments Company (Britam) had accused it’s former managers Edwin Dande, Elizabeth Nailantei Nkukuu, Patricia Njeri Wanjama and Shiv Arora over alleged irregular sums from Britam-affiliated accounts to rival companies.

The former managers had challenged the decision by the Director of public prosecution (DPP) to have the case go on full trial as irrational or illegal and their rights infringed, but all these have been dismissed with the judge’s decision to have the case go on trial court.

Britam had accused its former executives of wiring Sh1.16 billion out of Britam in five tranches to multiple accounts held by Acorn at Chase Bank and a further Sh2.78 billion to seven entities that are subsidiaries of Acorn.

I’ve come to notice the fraud cases were raised in 2016, two years after the executives left and formed another investment company;Cytonn which Dande one of the accused is the CEO. Being in the same field, one can’t help notice sprinkles of business rivalry between the two based on the court arguments I’ve seen.

Based on records, the former managers had accused their employer,Britam of engagement in several illegalities such is illegally  using client insurance funds to purchase shares of Britam to rescue a failed IPO, they also claimed that they objected to using insurance funds under their management to purchase a failing bank – a transaction that led to loss of billions of shillings of investors’ funds.

Also claimed they objected to failure to send statements or sending out-rightly misleading statements to investors in the unit linked products, we resisted being forced to put excessive funds into a bank where a relative of a Britam director worked, but what brought matters to a head was an attempt to have them take away from clients a Kshs. 5 billion portfolio, one that they had originated for clients, and gave to the group.

On leaving Britam, the managers were slapped with upto 7 different suits which later came down to two that are the subjects today. The suit was dropped against property development group Acorn and seven of its affiliates following an out-of-court deal.

Related Content:  Fidelity Bank With Sh.217B Assets Base Acquired By SBM Holding Group of Mauritius

Britam bought into Acorn in 2014 as the two firms agreed to partner on big-ticket real estate projects It is this joint venture between Britam and Acorn that was the source of a fallout that saw Dande, Ms Nkukuu, Ms Wanjama and Mr Arora exit Britam to found their own company—Cytonn Investments.

The two parties however fell out, with the insurer selling its stake in Acorn. This paved the way for Acorn to team up with a new partner, leading to its deal with Helios in the form of joint ventures.

While the courts have their say and the trial must go on regardless, there are basic questions in a layman’s level that has caught my curiosity in this case. How could a fraud in the scale of Sh9.8b occur in a company just by few executives without knowledge of the senior management I’m talking about the board. You can’t convince me if any fraud of that magnitude would happen then it would escape the top ranks knowledge, they’re either complicit of flipping pages for own interests.

First off, the money Britam claims was illegally transferred was recovered through a different firm Acorn, logically, such a transaction cannot happen without the knowledge of the senior officials not unless Britam lacks the basic channels of operations in any major company.

In a petition filed by the former employees back in 2016, the Executives of Cytonn Investments claimed that their former employer, Britam, has been harassing them for founding a competing firm. In the petition, Cytonn Executives wanted Britam compelled to furnish it with a forensic audit report carried out on the fund manager’s books, and a legal audit done on Britam’s transactions to establish whether the disputed transfer of funds was illegal as claimed by the firm.

Related Content:  Former Nairobi Deputy Governor Polycarp Igathe Named The New MD Of Equity Bank Kenya Ltd

Mr Dande in that petition held that the sums Britam claims were illegally transferred by its former employees were already recovered from another firm Acorn Group. He said the Sh5 billion was transferred to Acorn’s accounts with the knowledge and approval of top Britam officials.

Which brings me to my biggest concern, if Britam had clean hands, why haven’t they provided these crucial documents that would easily help in solving the case in its infant stages? A forensic audit by an independent audit firm would unearth and ascertain if indeed a fraud occurred and who in the hierarchy was involved.

However, by delaying to do all these while pushing for the case to go on full trial I can’t help but read malice in it and more so given the fact that the former executives have managed to put up a strong business rival in Cytonn that has scaled up in the markets. Reputation is key in these streets and one can easily exploit legal loopholes to damage one’s image like being labeled a fraudster in a sensitive financial space as an investment firm is the last thing one would need and that a rival would want.

As the case now proceeds to full trial and I’ve seen the Cytonn CEO has accepted and is not challenging it so to prove his innocence in court, it is a win for Britam who now has the upper hand. The burden is on Cytonn who’ll now have to sweat in convincing their customers that the suit is out of malice as they’ve persistently claimed.

Related Content:  Expert Analysis: Interest Rates Capping, A Populist Move By President Uhuru Built On Sand Disastrous To The Economy In Long Run

However, while at it to prove and stamp their innocence, their reputation is now in jeopardy. But this is business and according to laws of power,big you find a chance to crash an enemy, you do it completely and Britam will have a sweet revenge on its former employees who thought they were ‘smart’ to put up a rival firm in penis measurement with their bosses.


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
Continue Reading

Most Popular