Welcome to the third issue of The Weekly Brief, by The Kenyan WallStreet, a new newsletter that goes out every Monday morning at 9 am (EAT).

Today is a (much needed) public holiday in Kenya. The holiday is meant to be for Kenyans to plant trees but it’s more likely that this long weekend is reflective, and anxious. Kenya’s energy regulator is set to release the fuel price for the next thirty days, and the fintech unicorn Flutterwave is having mixed fortunes in its boardroom and expansion forays on the content.

Kenyans Brace for Fuel Price Review

On Tuesday Nov 14th, the energy regulator will release the fuel price review for the next month, in what has become one of the most anxiety-inducing events in the country.

• Fuel prices in Kenya have shot up in 2023 due to on-off subsidies, a doubling of VAT in mid-2023, fluctuations in global fuel prices, and the weakening shilling.

• None of these factors have changed drastically (in favour of lower prices) in the last four weeks.

In its latest review in mid-October, the regulator raised fuel prices by between KShs. 2.45 and KShs. 5.72. The prices would have been higher, but the government has been paying subsidies of between KShs. 3.07 (for petrol) and KShs. 11.64 (for diesel) to keep them lower.

• Any price hike, such as removing the subsidy, would increase fuel prices for November-December, and hurt an already worsening cost-of-living crisis into the holiday season.

• Last week, Energy Cabinet Secretary Davis Chirchir warned that prices might rise to KShs. 300 if international fuel prices rise drastically. “We hope it will not get there,” he added.

• Much of that hope is predicated on a fast resolution to ongoing conflicts in Europe and the Middle East, and other events currently disrupting commodity markets and prices.

In addition to all these, the country is also now engaged in a potentially expensive diplomatic tiff with one of its biggest trading partners, Uganda.

Uganda, which currently receives 90% of its oil imports from Kenya’s oil marketers, has said it will hand over the supply rights for its petroleum products to Vitol Bahrain E.C in a move set to see the country cut off its oil import reliance on Kenya.

• Uganda’s beef with Kenya, according to Uganda’s minister for energy, is that the current G2G deal being implemented in Kenya was done without consultation from the Ugandan oil marketing companies. As secondary customers, this led to supply disruptions.

• The tiff also threatens the supply of foreign exchange in the Kenyan market and also affects oil exports to the Democratic Republic of Congo(DRC). 40% of Kenya's oil exports to DRC pass through Uganda.

Headlines to Start Your Week

• Kenya has moved to address concerns on whether it can meet its debt obligations, and has kickstarted a process to end the private sector’s anguish on pending bills.

• In this analysis, Ruriga Kimani argues that Kenya’s supplementary budget signals a radical shift in priorities, which, though promising, carries with it “transitional hiccups and adjustment costs.”

• East Africa is currently experiencing unusual rainfall, and is bracing itself for what likely comes next: drought. Here’s why that matters.

• The voluntary carbon market is back in the news, as news that Kenya evicting an indigenous community from a major forest broke last week in a move lawyers suspect is all about carbon offsetting. Learn more about carbon credits here and here.

• The prestigious Angaza Awards program has once again opened its call for entries for the “2024 Top 10 Women to Watch” list. Submit your entry here.

In Listed Companies Last Week

• Safaricom released its half year results, and as expected, M-PESA remains its most profitable product. The mobile money service now accounts for 42.1 percent of the telco’s revenue. Its foray into Ethiopia is also paying off.

• KCB, Kenya’s largest bank’s valuation has recently dropped after its disclosures of ‘aggressive’ provisions for non-performing loans, mainly from one of its recent acquisitions. But what’s in a valuation?

• The British government’s investment arm, British International Investment PLC (formerly CDC Group) sold its minority stake in listed I&M Group. The bank is now urging advising the public “to exercise caution” in dealing with its shares as the deal goes through regulatory processes.

• Sasini PLC issued a profit warning of a decline by at least 25 percent. The agricultural firm is reeling from the effects of the drought, and recession in world commodity markets.

Flutterwave’s Mixed Fortunes

Fintech unicorn Flutterwave is having a month of mixed fortunes as it works towards expansion and an IPO. Its CFO, Oneal Bhambani, left after just 18 months on the job. Two other high-level executives in the finance department, who joined at the same time and from the same company as Bhambani, left in October.

The exits in the critical department are likely to raise eyebrows about the company, which has been working towards an IPO amidst multiple reputational challenges in and away from the boardroom in the last few years.

But

One of those challenges ended late last week after an anti-corruption court in Nairobi cleared the company of money laundering and fraud charges in a case filed by the Assets Recovery Authority (ARA) a year ago.

• In the ruling, Justice Nixon Sifuna accepted the withdrawal of the suit by the authority, ending one of the most watched cases in the African fintech sector.

• The court granted the withdrawal on condition that any civil or liability arising out of it would not be passed on to the government but solely laid on the CEO and Investigator of ARA behind the case.

In an affidavit seen by The Kenyan Wall Street, the authority’s lead investigator in the case said that investigations into the fintech’s accounts had found “no evidence of them engaging in criminal activities…as was initially suspected.”

• “The investigation report..has satisfactorily explained to me the source and legitimacy of the funds in issue and I am satisfied that the same are not proceeds of crime,” a director at the agency stated in an accompanying affidavit.

• “After considering all the facts presented to this court, as well as my earlier ruling on the agency’s request for withdrawal of this suit, the withdrawal is hereby allowed,” the judge said.

“With this case behind us, Flutterwave will focus on acquiring its license in Kenya, expanding its operations, and further supporting local businesses and economic growth,” the company said in a statement.

Another Win in Lusaka

As the fintech company works on getting its license in Kenya where the central bank recently warned against dealing with unlicensed money transfer services, the company has been granted a license in Malawi.

• The International Money Transfer Operator (IMTO) license was granted in October, and will enable the payments company to process remittances from Malawians and other Africans sending money back home.

“We are grateful to the Reserve Bank of Malawi for placing their trust in us. We look forward to this remarkable journey, and we remain committed to delivering the best possible financial services to the people of Malawi,” Olugbenga ‘GB’ Agboola, Founder and CEO said.

Upcoming Events

• Service Sector Special Economic Zones: Opportunities for Venture Capital Investors: Nairobi, November 16.

• Africa Tech Festival: Cape Town, November 13-16.

• Annual Tax Conference: Nairobi, November 23-24.

• The MSGBC Oil, Gas & Power 2023: Nouakchott, November 21-22.

• Latitude59 Kenya Edition: Nairobi, December 6.

Interview of the Week; Akin Dawodu, Citibank’s Cluster Head for Sub Sahara Africa (SSA).

Have a great week!

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