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Blue chips hardest hit by foreign exits

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Capital Markets

Blue chips hardest hit by foreign exits

NSE investor
The lucrative counters on the NSE lost between eight and 13.7 percent of value in the five days. FILE PHOTO | NMG 

Share prices of blue chip firms on the Nairobi bourse were the biggest losers in five days with foreigners as net sellers in what could signal flight to safety as the number of Covid-19 cases rises.

The plunge to below 2,000 points for the Nairobi Securities Exchange (NSE) 20 Share Index on Monday came as foreign investors accounted for nearly 90 percent of the total trade for the day.

On the same day, the number of Covid-19 cases rose to 16, having more than doubled the previous day to 15 from seven in the course of the week.

Data compiled by Standard Investment Bank (SIB) showed that in terms of buying, foreigners held just more than 55 percent of the market total trading for the day, showing the net position was foreigners selling.

The blue chips lost between eight and 13.7 percent of value in the five days, ending Monday. Of the top 10 losers during the five days, seven were blue chips, including Absa Bank #ticker:ABSA, Equity #ticker:EQTY, EABL #ticker:EABL and DTB #ticker:DTK. The three non-blue chips firms in the list were Sameer #ticker:FIRE, Kapchorua #ticker:KAPC and Williamson Tea #ticker:WTK.

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The loss by blue chips pushed the indices to the lowest levels in more than a decade, analysts noted, adding this had come as the share prices fell for the eighth consecutive session.

“All the benchmark indices closed in the red with the NASI, NSE 20 and NSE 25 declining 3.6, 3.3 and 4.1 per cent, respectively. The NSE 20 retreated for the eighth consecutive session to close below the 2,000 mark, the lowest in over a decade,” said SIB.

The fall in prices also served to raise the dividend yields of several blue chips, including Absa that stood at 10.78 percent, Nation Media Group #ticker:NMG, Bamburi Cement #ticker:BAMB, Standard Chartered #ticker:SCBK and Safaricom #ticker:SCOM.

The net foreign outflows stood at Sh149 million with Safaricom leading the charge with total net outflows of Sh128 million. “Foreign investors started the week as net sellers, recording net outflows of $1.4 million. Safaricom led the selling charge with net outflows of $1.2 million,” said SIB.

With the blue chips falling, Genghis Capital recommended that investors take positions in KCB #ticker:KCB and Equity as a way to lower the cost base of their portfolios.

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SMEs receive fresh guarantees to ease repayment of loans

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SMEs receive fresh guarantees to ease repayment of loans

Akinwumi Adesina
African Development Bank president Akinwumi Adesina. FILE PHOTO | NMG 

The African Guarantee Fund (AGF), a non-bank financial institution jointly owned by the Danish and Spanish governments as well as the African Development Bank (AfDB), is to guarantee small and medium enterprises (SMEs) to have their loans with commercial banks restructured.

The AGF Covid-19 Guarantee facility will allow SMEs to pay less over a given period than what they had been paying and therefore cope better in the face of the Covid-19.

“African Guarantee Fund for Small and Medium-sized Enterprises (AGF) has announced its Covid-19 response aimed at reducing the uncertainties facing financial institutions in Africa as a result of the global coronavirus pandemic.

“AGF’s Covid-19 response is built on the imperative need for commercial solutions over and above the regulatory efforts already provided by the various central banks and governments in the continent,” said the AGF in a statement.

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“The African Guarantee Fund’s response sets the platform for economic stabilisation, followed by an economic revival through AGF’s newly developed Covid-19 Guarantee Facility that will, firstly, provide more comfort to financial institutions to restructure facilities that become non-performing because of Covid-19 and, secondly, provide commercial stimulus to the financial sector with the aim of mitigating the deterioration of SMEs’ perceived risk.”

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The AGF, however, did not reveal the amount set aside for guaranteeing the SMEs nor did it give any criteria to be used in determining which entities qualify.

Kenyan banks have been restructuring loans held by their clients in recent months, but so far the amount whose terms have been so changed is still less than Sh200 billion out of an industry loan portfolio of over Sh2 trillion.

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A future of redesigned public, working spaces

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A future of redesigned public, working spaces

Open office.
Open office. FILE PHOTO | NMG 

Social distancing is now the norm in every public space thanks to the highly contagious Covid-19.

With the World Health Organisation (WHO) warning that the virus could be here to stay, the possibility of social distancing remain with us for a while looks real.

On the basis of this eventuality, built environment experts now want public spaces and buildings redesigned to mitigate future pandemics known to thrive in dingy, congested and poorly planned spaces.

The experts said Kenya should learn from the Covid-19 pandemic that has led to changes in seating arrangements in vehicles, offices and limited public gatherings to a minimum of 15 people.

Architectural Association of Kenya(AAK) president Mugure Njendu said post-Covid, major changes must be made within private and public buildings to create spaces that enable people to observe social distancing to deter new Covid-19 infections.

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“We need less desks within offices and workmates in large groups must be retained in same groups to help contact tracing in case of new infections,” she said, adding that movement within offices should be remodelled to accommodate separate entry and exit points to reduce regular interactions.

Companies and state agencies, Ms Njendu said must adopt a “hands-free” way of doing things from opening doors, water taps, soap dispensers and elevator buttons. She was speaking when they launched the fourth weeklong public sensitisation campaign, dubbed #JeUnaMjengo, on safe buildings.

Speaking at the same event, AAK’s Town Planners Chapter chair Juliet Rita called for a fresh examination of all public spaces from markets, bus stages and termini as well as public offices, health centres, educational and sports facilities to inform mitigation measures that enhance healthy living within urban areas.

The physical and transport planner said Kenyans must pro-actively protect public spaces from grabbers by keeping tabs on plans and proposals posted on county government websites.

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“Interrogate the county spatial plans, county investment plans and most importantly the municipalities’ annual investment plans. Nairobians should know ‘the NIUPLAN’, the envisioned railway city among other plans like the back of your palms so that you can question development decisions that are contrary to these plans,” she said.

AAK’s honorary secretary Marylyn Musyimi called for increased investments in social public infrastructure to ease queues at watering points and reduce jostling for space along footpaths used by bodaboda operators as well as pedestrians.

“Dignified housing must provide well ventilated functional spaces with good lighting and built using an appropriate choice of material. They must be provided with clean running water, electricity, proper sanitation, green spaces, pedestrian and cyclist lanes on roads, schools, hospitals and religious and social spaces,” she said.

The AAK campaign that lasted five days called for closer engagements between professionals, regulatory authorities and investors to ensure quality properties that adhere to laid down rules are put up to avert demolitions and building collapsing due to poor workmanship.

Meanwhile, churches and mosques as well as public gatherings might witness a major shift in sitting arrangements leading to reduced audiences and mandatory temperature testing via auto-thermal cameras or handheld thermal guns.

Restaurants and retail chains are already taking steps towards making their spaces safe, having installed plexiglass in key service areas to minimise human contact while allowing operations to go on

Fast-food restaurant operator Simbisa Brands has opened a takeaway section at its latest outlet at a petrol station on Eastern bypass, Ruiru that incorporates Pizza Inn, Chicken Inn and Creamy Inn awaiting inspection and advises on the sitting arrangement on its first floor dining area.

Nairobi’s Naivas outlet on Moi Avenue has been controlling traffic to reduce crowding where shoppers line up outside the facility.

Most drugstores, money agents, retail shops and takeaway eateries have placed branded strapped encouraging customers to shop while standing about a metre away from the counter while service outlets have all their attendants equipped with masks.

Post-Covid, most facilities and public service vehicles will likely provide sanitisers as well as soap and water. Ms Njendu said future construction designs of buildings will have to incorporate larger spaces and more doors as well as new restroom designs to accommodate the social distancing rule, while buttonless elevators might become the norm with more people preferring to walk up and down the stairs.

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500,000 homes in dark despite power connection subsidy

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500,000 homes in dark despite power connection subsidy

Bernard Ngugi.
Kenya Power Managing Director Bernard Ngugi. PHOTO | SALATON NJAU | NMG 

Jubilee administration is set to leave thousands of families in the dark when its term ends in two years as only 48 percent out of 1.02 million targeted households have been connected to the national electricity grid.

Kenya Power #ticker:KPLC, the utility firm charged with hooking households to the electricity mains, has so far connected 494,374 under a five-year subsidised electricity project launched in September 2015.

“Accelerating access to electricity has been a priority national goal, acknowledging that electricity supply catalyses socio-economic development,” said managing director Bernard Ngugi.

“The last mile project targets to connect a total of 1.02 million customers out of which 494,374 have already been connected. Rural centres transform quite fast after they are connected to supply.”

The project funded by the World Bank, the African Development Bank (AfDB) and the Kenyan government targeted customers situated near transformers and was to be carried out in three phases.

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The plan now in the second phase has largely been implemented through the funding from AfDB with 60 percent of the connected customers done through the banks funding. The government has funded about 30 percent and the rest done by funds from the World Bank.

The project may delay further as AfDB plans to audit the first phase of the project where some 224,952 customers were hooked to the grid through its funding.

The lender, which recently blacklisted a Chinese firm involved in the project last month invited firms to tender for the provision of audit services for the project, a process that will subsequently inform support for future Kenya Power projects.

“The independent development evaluation function of the African Development Bank Group invites individual consultants to indicate their interest for the impact evaluation of the Last Mile Connectivity Project in Kenya,” said the bank in a tender notice.

“The evaluation will focus on the bank-funded Last Mile Connectivity Project approved in 2014 and scheduled to close in 2020.”

Chinese company Sinotec contracted by Kenya Power for the second phase of Last Mile Project is said to have misrepresented its experience to meet qualification requirements for several AfDB-funded projects in what may have compromised the quality of connections.

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