Dangote Refinery Starts Production, Kenya's Saccos Plan for 2024

Here's what you need to know to start your week

Author

Kenyan Wall Street
January 15, 2024

The Weekly Brief, by The Kenyan Wall Street, is a newsletter that goes out to 10k+ subscribers every Monday morning at 9 am (EAT).

It’s 15th Jan, and fuel prices are down by Kshs. 5 until Valentine’s Day. Those two things alone are a huge reprieve, but it’s still too early to guess how 2024 will be for individuals and enterprises.

In 2023, someone ordered food worth KShs. 89, 000 via Bolt’s food delivery service, and another ordered food be delivered 98kms away. Selling food, it turns out, is the real claimant of the title of world’s oldest profession.

In this issue, Dangote Refinery has six million barrels of crude oil and has begun production, Uganda’s MPs are worried about debt, and Kenyan Saccos are hopeful for 2024.

Dangote Refinery Starts Production

Dangote Petroleum Refinery has commenced production of diesel and aviation fuel.  

  • The refinery has so far received six million barrels of crude oil at its two SPMs.

  • The first crude delivery was done on December 12, 2023, and the 6th cargo was delivered on January 8, 2024.

  • The Refinery can load 2,900 trucks a day at its truck-loading gantries.

“This is an important achievement for our country as it demonstrates our ability to develop and deliver large capital projects,” President of Dangote Group, Alhaji Aliko Dangote said.

“I also sincerely thank our host communities and their Traditional leaders for their sustained patience, forbearance, and admirable willingness to work with us to find amicable and win-win resolutions to the many issues we have had to deal with as the construction of this huge facility progressed.”

Designed for 100% Nigerian crude with the flexibility to process other crudes, the 650,000 barrels per day Dangote Petroleum Refinery can process most African crude grades, Middle Eastern Arab Light, US Light tight oil, and crude from other countries.

Dangote Petroleum Refinery can meet 100% of Nigeria’s requirement of all refined products, gasoline, diesel, kerosene, and aviation jet, and also have surplus for export.

  • The refinery was built to take crude through its two SPMs located 25 kilometres from the shore and to discharge petroleum products through three separate SPMs.

  • It also has a marine facility that can handle the largest vessels in the world today.

  • In early December, the refinery received the first one million barrels of Agbami crude grade from Shell International Trading and Shipping Company Limited (STASCO).

Meanwhile, Dangote Group, the parent company of Dangote Refinery, has sought to clarify a Jan 4th raid by anti-corruption watchdog, the Economic and Financial Crimes Commission (EFCC), to its headquarters.

The EFCC has been investigating a controversial multiple exchange rate regime ran by the country’s former central bank governor, Godwin Emefiele. Among the allegations is that the regime allowed favouritism. Emefiele was only granted bail in December after being detained by various agencies for six months. On Jan 8th, the High Court in Abuja ordered the EFCC to pay him N100 million for his prolonged detention.

“…no accusations of wrongdoing have been made against any company within our Group,” the company said in the Jan 8 statement.

  • The conglomerate said that it had received a letter from the EFCC to supply details of “all the foreign exchange allocated to [] company…from 2014 to the present,” in early December.

  • Similar letters were sent to all other listed companies.

  • The Group said it had requested for additional information and time, which were denied, and that its team was at the EFCC delivering the first batch of documents when the headquarters were raided.

According to the Financial Times, the fact that Dangote Group was the only listed company to be raided by the anti-corruption watchdog might fuel speculation that its founder and Africa’s richest man, Aliko Dangote, “has fallen out of favour with Tinubu’s administration.”

Headlines You Might Have Missed

NEWS SNAPSHOT:Uganda’s Legislators Discuss Country’s Debt

According to the State Minister for Finance, Hon. Henry Musasizi, the total debt stock as of June 2023 stood at US$23.7 billion, compared to December 2022 when it stood at US$21 billion.

  •  The minister added that of the current shs2.7 trillion of domestic arrears registered as of June 2023, government plans to set aside shs200 billion in financial year 2024/2025 to pay off part of the arrears.

  • Otuke County Member of Parliament, Hon. Paul Omara tasked the minister to clarify contrasting reporting on public debt where the Auditor General’s report put the country’s debt at shs96 trillion, yet the Ministry of Finance reported shs86 trillion.

  • Hon. Dicksons Kateshumbwa (NRM, Sheema Municipality) alluded to the Charter of Fiscal Responsibility saying the domestic debt repayments to total revenue projected at 18.9 per cent against the 13.6 per cent target, is worrying for Ugandans.

“It is very worrying because debt repayments are eating away a huge portion of our revenues. So we are not complying with the charter and we need measures to stay within the projected range,” Kateshumbwa said.

Kenya’s SACCOs Missed Opportunities in 2023, Plan for 2024

By Jackson Okoth

The cooperative sector in Kenya has little to celebrate with many missed opportunities in 2023.

  • As 2024 begins, the SACCO industry is yet to have a Central Finance Facility-a platform that will enable inter-Sacco lending.

  • Although the industry has had a central finance facility run by the Kenya Union of Savings and Credit Co-operatives(KUSCCO) Limited, for the past 30 years, the lobby group is embroiled in a tussle for control of the facility with the Co-op Ministry.

  • On the sidelines are commercial banks, who view the inter-Sacco lending facility as a rival to their dominance of the credit market.

A fully operational inter-lending facility for Sacco means that these financial societies will be able to meet their liquidity shortfalls, do electronic fund transfers. It’ll also allow those with excess cash to lend it out and earn interest through the platform, wiping out the competitive edge that banks currently enjoy.

Among other issues that are yet to be resolved is a review of the Co-operatives Act- so that it aligns with the new constitution. This has created new complications for cooperatives. For example, since the co-operatives sector now a devolved function, it is still unclear where the commissioner for co-operatives and SASRA supervision and mandate begins and ends. There is also duplication of roles between county governments and the National Government in the supervision of Societies that have a presence in more than one County.

Due to a lack of clarity within Co-op Act Cap 490, deposit-taking Saccos have been paying levies to both county governments and SASRA.

  • Cap 490 and the Sacco Act clauses require a financial cooperative society to have 9 members on its board of directors.

  • This, according to experts, is a static and obsolete situation that does not reflect what is happening on the ground, especially with multi-sector DT Saccos societies that draw membership from all Counties and economic sectors.

  • Industry insiders insist that clauses dealing with the common bond as well as definitions such as Management Committee Members should not feature in the co-operatives law and statutes.

The Liquidation Death Trap

According to the Kenya Society of Professional Co-operators (KSPC), there are no policy guidelines and safeguards to protect the frozen assets of co-operative societies under the liquidator’s hammer.

Analysts attribute the collapse of Kenya’s once vibrant cotton, cashew nuts, sisal, and pyrethrum farming as well as the sharp decline in the fortunes of the coffee industry, to a shutdown of many cooperative societies that once supported farmers in these agricultural sub-sectors.

  • Many co-operatives that face liquidation risk having the assets end up in private hands after being sold off without the knowledge of members.

  • There are many moribund Co-operatives that shut down operations years ago but are yet to be sold off and proceeds from the sales redistributed to members.

  • Co-op sector experts maintain that the liquidation process takes too long with many members waiting for decades before their claims are settled by the liquidator, an officer that is usually appointed by the Commissioner for Co-operatives.

There has been a push to have a time limit upon which the Commissioner must conclude the process, such as a 4 year window, and an annual report to an appointed caretaker management committee. Industry players have also suggested independent valuations that precede any asset sales.

At present, there are concerns that the liquidator enjoys too much power and is not answerable to members of the affected societies.

The Future

As 2024 begins, all eyes will be on Parliament as it seeks to pass a policy paper that will trigger a review of Co-op Act Cap 490, and eventually set up an inter-Sacco lending facility in addition to updating the law.

Also under close watch will be The Law of Contract (Amendment) Bill 2023 which seeks to shield guarantors from the auctioneer’s hammer, when those they have guaranteed fail to meet their debt obligations.

This Bill intends to protect the assets of guarantors, requiring that all lending institutions, including Banks and Saccos, first liquidate a defaulter’s properties-including shares or unpaid dividends/rebates, before targeting those held by a guarantor(s).

Upcoming Events

  • Africa Collective: Davos, 15-19 Jan

  • Africa Tech Summit Nairobi: Sarit Expo Center, 14-15 Feb.

  • Africa Agri Expo: Nairobi, 19-20 Feb.

  • Global Black Impact Summit: Dubai, 27 Feb.

What else we are reading

Interview of the Week

Nifemi Oluboyede, Head of Product, Growth, and Partnership at Credit Direct talks about cross border transactions and product management.

Have a great week!