When on April 2nd 2015 Centum Investment Company Limited (“Centum”) signed an investment deal worth USD 155 MILLION (Kshs.14 billion) in debt and equity with AVIC International, Industrial & Commercial Development Corporation (“ICDC”) and The Co-operative Bank of Kenya Limited, it is not ICDC nor The Co-operative bank that caught my attention but AVICI, formed in 1979 and controlled by AVIC (Aviation Industry Corporation of China).
AVIC itself was formed in 1st April 1951 during the Korean War, later spilt into AVIC I and AVIC II respectively then merged again in 2008 to focus on the efficient development of indigenous (Chinese Oriented) military technologies, and to eventually compete with Airbus and Boeing in the civilian airline industry. But it is has since diversified into other business ventures notably real estates and construction industry.
The investment by AVIC International is in the tune of USD 70 Million (over Kshs. 6.3 Billion) in equity for Two Rivers Lifestyle Mall. Two Rivers Development project is managed by Athena Properties Limited, a subsidiary of Centum. Sitting at 670,000 SQFT of lettable space somewhere along Lumuru road, it is dubbed to be the largest retail mall in Sub-Saharan Africa when it opens in October 2015 after Garden City Mall which opened along Thika Road on May 28th 2015.
Despite the 2007/8 PEV (post-election violence) the Al-shabab’s continued activities and threats that have dented the image of Kenya abroad as an insecure destination, despite the tanking of the Kenya shilling against foreign currencies, the heaviest since 2011 and an inflation that stood at about 5% in May 2015, foreign companies or their subsidiaries are silently taking a foothold on Kenya’s economy, the latest craze being in real estates, road, rail construction and retail chain investments.
Being one of the largest foreign direct investments in this region by a Chinese corporation into a private enterprise, AVIC International joins a list of multinationals and foreign companies that have sharpened their knives for the Kenya’s Pie in the recent past. Looking at the market landscape, you cannot help but notice giant foreign companies roaming Kenya like colossuses. When they are not acquiring shares in the local companies, they are winning huge tenders in the construction industry. Here another group of Chinese Construction Companies have a tight grip on the Kenya road and rail constructions industry since former president Mwai Kibaki started looking east. The current president Uhuru Kenyatta just put the icing on the cake by confirming the ventures by the Chinese owned companies. Leading the charge on this front is SynoHydro Corporation, the Chinese firm famed for the Thika superhighway construction. It is now doing the Ksh, 7.4bn Outering road expansion project. Monitoring the project is yet another foreign company, Lea International, a Canadian engineering firm; of course we cannot forget the mighty Standard Gauge Railway Project done by the China Road and Bridge Corporation (CRBC). CRBC is also spearheading the expansion of the Ksh 41 billion shillings ($484 million) Lamu Port-South Sudan-Ethiopia (LAPSSET) under a consortium of Chinese companies led by China Communications Construction Company among the other biggest projects currently being done by Chinese owned companies or their subsidiaries in Kenya.
In the Telecommunication industry, there is the bullish Vodafone owned Safaricom Ltd which boasts of a subscriber base of approximately 23.3 million as at March 31, 2015 million and has continued to post mind boggling profits over the years since 1997. Vodafone Group Plc of the United Kingdom owns 40% stake, the Government of Kenya 35%; and Free Float 25%. Then there is Bharti Airtel known in Kenya as Airtel Kenya. In June 2010 acquired the African business of Zain Telecom for $10.7 billion making it the largest ever acquisition by an Indian telecom firm. From that brief it goes without saying Airtel-Kenya is owned by an Indian company. Our very own Kenya’s Post &Telecommunication Corporation foundered along the road after the liberalization of the market when later it was split to Telekom Kenya and Postal Corporation of Kenya before the former being sold off to Orange S.A. a French multinational telecommunications corporation.
The race to own a piece of Kenya’s Juicy USD 50bn GDP market seemed to be a vicious fight between the dragon and the Rainbow. Despite a disastrous outing into Kenya in the 90’s by South Africa’s companies, the trend seemed to have changed. They went back having learnt a thing or two about what former Safaricom’s CEO Michael Joseph said of peculiar habits of Kenyans after a survey by South Africa Inc. and now they are back with a vengeance: already the following companies have been lapped up by their South Africa’s counterparts: Access Kenya bought by Dimension, Liberty Group is said to be negotiating the purchase of Greenspan Mall in Nairobi’s Dornholm. Micsha Capital through Old Mutual has acquired eight per cent share of Faulu bank, Cannon Assurance went to Metropolitan, Gateway Insurance bought by Pan African Insurance, the master DJ of all the Djs Chris Kirubi’s Haco Industries got spun onto Tiger Brands ‘s tables. UAP is up for sale and old mutual is said to be ready with a knife and fork. The list is long and includes among others Del Monte, Nation Media Groups (NMG) and others. If you thought East African Breweries Ltd (Kenya Breweries) is Kenyan owned then you still need to read more about Diageo. Coca cola is yet to go off the stranglehold it has on the beverage market, Pepsi another foreign company is trying its luck where one Peter Kuguru of Kuguru Foods was shown dust, and compound the dilemma, most of these companies are managed by foreigners!
Why if one may ask are foreign companies trouping to Kenya despite the aforementioned dots on our sheet? Two plausible reasons come to mind, top on the list being devolution. Forget what the naysayers are saying, devolution is working, if anything, it is doing much better than had been expected 2 years into the run. Recent Ipsos ltd survey of Kenyans’ take on devolution returned a resounding yes for the devolved system of government. The second one is Kenyans ability to cope and live through disasters. We have proven to the world that we are a resilient lot. The terrorist attacks have not been able to make Christians rise against their fellow Muslim brothers and sisters. We have been able to pick the pieces and moved on majestically. From the 1998 US Embassy bombing, to the PEV, the recent West Gate and Garissa attacks, despite incessant political bickering between the ruling coalition Jubilee and the opposition CORD, Kenyans have remained optimistic and are always out there come floods or Nairobi traffic jams. And despite the noise, our politics has not taken us the Burundi or South Sudan’s ways. All this have in turn boosted investor’s confidence.
With the goings on under our own noses, one is tempted to ask: do we Kenyans own our Kenya? Yes but very little indeed. Still we can boast of Equity Bank (Equity Group Holding Limited) with an asset base estimated at over US$3.83 billion (KES: 339.44 billion), and shareholders' equity in excess of US$644.6 million (KES: 57.1 billion), as of 30 September 2014. Centum Investment Company, Limited which recently received Capital Markets Authority (CMA) approval for the public listing of KShs. 6billion through the issuance of fixed rate and equity linked notes on the Fixed Income Securities Market Segments (FIMS) of the Nairobi Securities Exchange (NSE) on 5years tenor is one of the Kenya companies alongside Equity bank and Keroche industries giving foreign companies a run for their money. The others are Cooperative Bank of Kenya and Standard Group which runs The Standard Newspaper, (KTN), Radio Maisha, the County Weekly and Keroche Industries, among others. It is high time we went back to ‘buy Kenya build Kenya.’
All is not lost though as the tourism industry has taken a big hit; we can build from this new craze for Kenya and attract foreigners who would be glad to invest in the fast opening market of the Mall sensation. With proper security strategies, we in turn would attract tourists who would have another reason to visit Kenya-shopping; over to you Amb. Amina. But as we do so Kenyans must ask or strive to have a big share in the investments companies otherwise in the near future the Kenyan market would be run like a local company or parastatal under receivership by foreign companies.