Looking at the year ahead

Posted on January 3, 2011

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Looked at from several angles, 2011 is a very optimistic year for both the government and private sector in Kenya. The year, riding on a high end for 2010, is billed to be very significant in terms of providing opportunities and directions to the future of the country.

Several activities have been lined up to spur the economy and projection by the Kenyan government is that, come end of the year, the growth will be at 6 per cent. In 2010 the final revision of the projections has put the growth at 5 per cent up from 2.1 per cent in 2009.

From bizextras point of view, the diary is packed, especially for the private sector as they seek to prove their point in the respective fields of business. First, in the to-do list is Bharti Airtel and their multi billion Rupee investments in Africa.

Coming in at a time when the mobile telephone industry in Kenya and Africa is facing its turning point, the firm’s investments and business model is facing what is perhaps its sternest test. When they first set up shop in Kenya, they promised to shake up the market and have lived up to that promise. Calling charges drastically dropped to the jubilation of subscribers across all the operators.

Airtel Kenya MD Rene Meza and Head of Bhart Airtel Anglo-Africa Jayant Khosla at the launch of the Airtel Kenya brand in Nairobi

With a Sh24 billion budget for its operations, subscribers have already noted that “They can do better than this’ in terms of service delivery in both voice and data. With a planned system and network upgrade to 3G network by the company, subscribers will be looking out for improved services. **Let’s wait and see**

 

 

 

Still on the telecoms’ to-do list is the number portability expected to be rolled out by mid-year. After a rough tumble and several false starts, the Communication Commission of Kenya seems to have got it’s footing on the issue.

Safaricom CEO Bob Collymore. The company says number portability is a waste of resources in their view

However, leading player in the industry by market share- Safaricom -is not happy with the move. Bob Collymore, the firm’s chief executive officer, has made it known that they are only participating in it because CCK wants them. To Safaricom ‘number portability is a waste of resources’

 

 

At the Nairobi Stock Exchange, the dry spell of initial public offerings is set to continue well until up to the last quarter of 2011. The last time a company went to the market to raise additional capital by way of listing was in 2008- Co-operative Bank of Kenya. Characterized by thin trading margins in 2008 and 2009, the market seemed to have got its groove back in 2010. Closing trade on December 31, at 36 per cent higher than he previous year, 2011 can only look better.

Investors flock at the entrance of the Nairobi Stock Exchange. Market players have reported improved confidence among retail investors

Although the investor confidence and appetite have come back, trading is still controlled by foreign and institutional investors. The pie for local retail investors is still below the 20 per cent mark of any trading sessions. Top of the capital markets’ to-do list this year is the planned demutualization and creation of a Small and Medium Enterprises trading platform at the bourse. These are expected to be in place within the first half of the year. Additionally, the momentum built by rights issues and bond trading is set to continue on the backbone of an improved economic environment.

Across the borders, the January 9 Southern Sudan Referendum has a direct bearing on Kenya’s economy. Whichever way it goes, although the odds are that the vote will go for a separation, Kenya has an interest.

In Tanzania, the IPO planned by Precision Air is expected to finally materialize this year. The country is also on watch by its East African Community (EAC) partners as concerns the implementation of the EAC Common Market protocol that came into being last year. The other member states-Uganda, Kenya, Burundi and Rwanda -are also expected to move with speed and implement the protocol.

Uganda remains on the international radar for its oil exploration. With several undertones being spewed over the project, a decisive direction needs to be taken by the government on the way forward.

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