ECONOMY
Uganda Plans to Hand Over Exclusive Petroleum Supply Rights to Vitol, Ending Kenyan Dependency
In a significant move aimed at enhancing energy security and reducing supply vulnerabilities, Uganda is set to grant exclusive rights for the supply of all petroleum products to a unit of global energy trader Vitol. The decision was confirmed by Uganda's Energy Minister, Ruth Nankabirwa. Currently, fuel companies in the landlocked East African nation source their petroleum products through affiliated firms in neighboring Kenya, which import the products via the Mombasa port. This system, responsible for 90% of Uganda's fuel imports, has often exposed the nation to supply disruptions and volatile pump prices.
Nankabirwa disclosed that a five-year contract has been negotiated between Uganda National Oil Company (UNOC) and Vitol Bahrain E.C., with Vitol providing the necessary working capital to facilitate the business. The central bank data indicates that Uganda imported petroleum products worth $1.6 billion in 2022. In response to these developments, Uganda's cabinet has approved changes to the petroleum law, allowing Vitol to exclusively supply UNOC. UNOC will then distribute the products to petrol station operators. To further secure supply reliability, Vitol and UNOC are planning to establish "buffer stocks" in Uganda and neighboring Tanzania.
The move to end the reliance on Kenyan importers aims to safeguard Uganda from potential supply vulnerabilities that arise when disruptions occur, affecting retail prices. Nankabirwa pointed to the previous system's shortcomings, where Ugandan retail companies were considered secondary during supply disruptions.
ACQUISITIONS
Central Bank of Kenya Announces 51% Acquisition of SMEP Microfinance Bank by HOPE Advancement Inc
The Central Bank of Kenya (CBK) has announced a significant development in the country's microfinance sector, with the acquisition of a 51 percent stake in SMEP Microfinance Bank PLC (SMEP MFB) by HOPE Advancement Inc. (HOPE). Prior to this transaction, the National Council of Churches of Kenya held a majority 71 percent of SMEP MFB's shares, establishing SMEP as a significant player in the microfinance banking sector, with a 5.09 percent market share.
SMEP joins a growing list of Kenyan firms that have recently sold stakes to foreign entities, reflecting the dynamic nature of the financial industry in the country.
Over the past three years, institutions such as Century Microfinance Bank, Choice Microfinance Bank, Maisha Microfinance Bank, Key Microfinance Bank, and Salaam African Bank have experienced similar acquisitions.
In 2021, Salaam African Bank, the largest bank by branch network in Djibouti, acquired 100 percent ownership of Kenya's Uwezo Microfinance Bank.
HOPE, the acquiring entity, was incorporated in the State of Delaware, USA, in 2011. It operates as a wholly owned subsidiary of HOPE International Inc., a charitable organization headquartered in Pennsylvania, USA. HOPE serves as the holding company for various investments and microfinance activities within the group. Besides its stake in SMEP MFB, HOPE holds shares in microfinance institutions such as Urwego Bank Plc of Rwanda and Turame Community Finance of Burundi.
The acquisition of a majority stake in SMEP MFB by HOPE is expected to inject additional capital into the microfinance institution, enabling business expansion, enhancing information technology infrastructure, and reconstituting the board to strengthen governance within the organization. This move reflects a strategic effort to further develop Kenya's microfinance sector and promote financial inclusion among the country's population.
COMPETITION
Comesa Competition Commission Approves Africa Capitalworks' Acquisition of Cipla Quality Chemical
The Comesa Competition Commission has officially granted its approval for a share purchase that allows Africa Capitalworks to acquire Cipla Quality Chemical Industries without any conditions. This significant development in the pharmaceutical sector has been eagerly anticipated since the announcement of the purchase deal in April, originally set to be completed by May. The delay of over four months in finalizing the transaction was primarily attributed to the necessary regulatory approvals, with the Capital Markets Authority (CMA) and the Comesa Competition Commission requiring clearance. The decision to support the acquisition aligns with the goal of promoting regional self-sufficiency and boosting the growth of a leading life-saving drug manufacturer in sub-Saharan Africa, both within Uganda and across the wider region.
The Committee Responsible for Initial Determination played a pivotal role in evaluating the proposed acquisition, ultimately ruling that the merger is unlikely to significantly impede competition in the Common Market or any substantial part of it. Dr. Mahmoud Momtaz, the chairperson of the three-member Committee, emphasized that the transaction is not contrary to public interest and is unlikely to negatively impact trade between member states. In July, Comesa invited various stakeholders, including competitors, suppliers, and customers from both within and beyond the region, to provide their feedback on Africa Capitalworks' acquisition of sole control over Cipla Quality Chemical.
COMPANIES
Public Procurement Watchdog Rejects Review of Sh65 Million Tender for MP Group Life Insurance Cover
The Public Procurement Administrative Review Board (PPARB) has turned down an application for the review of a Sh65 million tender awarded to APA Life Assurance Ltd for the provision of group life insurance cover for Members of Parliament. The decision came in response to an application made by Absa Life Assurance Kenya Ltd, which alleged that the winning bidder failed to account for stamp duty and policyholders' compensation fund levy, potentially disqualifying them. However, the PPARB, led by Mr. George Murugu, ruled that the tender evaluation process adhered to the Procurement Act, regulations, and the tender document, which did not require specific outlining of levies and taxes, considering them inclusive within each tender sum.
Absa Life Assurance Kenya Ltd had raised concerns over the procurement process, arguing that APA Life Assurance Ltd's winning bid failed to include stamp duty and the policyholders' compensation fund levy, potentially giving them an unfair advantage in the competition. The firm contended that the omission should have resulted in disqualification. However, the PPARB's verdict maintained that the tender evaluation was executed according to the required legal and procedural standards.
The board's decision highlighted that the tender document did not explicitly demand bidders to specify the levies and taxes, instead assuming that each tender sum would include all applicable taxes and levies. This ruling marks the conclusion of the dispute, affirming that the procurement process was in accordance with the law and regulations.
COMMODITIES
Kenya Plans to Buy Back Up to 20 Percent Stake in Turkana Oil Project
In a move that could potentially influence the fate of the Turkana oil project, Kenya is considering exercising its right to purchase a 20 percent stake in the project. The decision to buy back the stake will hinge on the government's approval of the project's revised development plan and the availability of necessary funds. The Energy and Petroleum Regulatory Authority (Epra) director-general, Daniel Kiptoo, revealed this information on Thursday, indicating that the government's back-in option is part of the production-sharing agreement.
The production-sharing contract grants the Kenyan government the right to acquire a 20 percent share in the Turkana oil project once the field development plan is approved, transitioning the project from the exploration phase to the development phase. Mr. Kiptoo emphasized that the government's final decision regarding the stake purchase would be made after the ongoing review of the field development plan (FDP) has been completed. This crucial step will ultimately determine the project's future and the government's level of involvement.
The Turkana oil project has been subject to various delays and challenges, including revisions to the development plan and funding uncertainties.
WHAT YOU MUST HAVE MISSED
The Carbon Value Exchange (Cavex) Secures $6 Million in Seed Capital to Scale Digital Carbon Financing Platform
The Carbon Value Exchange (Cavex), a cutting-edge digital carbon financing platform, has successfully secured Sh905.15 million ($6 million) in seed capital in a recent transaction. The funding round was spearheaded by E3 Capital, a Nairobi-based investor specializing in early-stage businesses, and supported by FSD Africa Investment. The primary goal of this substantial investment is to empower Cavex and its portfolio companies to access global carbon markets effectively.
British International Investment Commits Sh3.99 Billion to African Warehouses for Food Security
British International Investment (BII), the UK's development fund, has announced a substantial commitment of Sh3.99 billion ($26.5 million) to bolster food security in Africa. The funds will be directed towards supporting smallholder farmers in three African nations, including Kenya. The investment aims to enhance grain storage facilities and combat food insecurity in the region.
The investment will be channeled to Afex, Africa's prominent commodities platform, which operates a network of over 200 warehouses across Nigeria, Kenya, and Uganda, catering to more than 450,000 farmers. While the specifics of the investment, whether in the form of debt or equity, were not disclosed, the funds are expected to be utilized for the construction of 20 modern warehouses in these countries.
The Real Estate Investment Trusts (REITs) Association of Kenya (RAK) has successfully hosted its highly-anticipated 2023 RAK Annual Conference
The Real Estate Investment Trusts (REITs) Association of Kenya (RAK) has successfully hosted its highly-anticipated 2023 RAK Annual Conference at the exquisite Enashipai Hotel in Naivasha. The conference, centered around the theme "Building Momentum and Unlocking the Power of REITs in East Africa," attracted a diverse and influential audience of over 200 participants. Among the attendees were industry experts, policymakers, investors, and real estate professionals hailing from East Africa and beyond, all eager to explore and capitalize on the immense potential of Real Estate Investment Trusts (REITs) in the region.
During the conference, Ken Masika, the Chairman of the REITs Association of Kenya, delivered an insightful keynote address, emphasizing the transformative impact of REITs. Masika declared, "Real Estate Investment Trusts (REITs) are potent instruments that have the transformative power to revolutionize the way we approach investment, development, and economic growth in our region."