Safaricom’s Sh4.3Bn Machakos real-estate project to open in 6 months

The development is being put up at a cost of 4.3 billion in Machakos County with the centre piece being a 200,000 square feet mall with a total of 200,000 Square Feet of lettable floor space, and a residential area consisting of 3 and 4 bedroom townhouses, plus a cluster of 3 bedroom apartments.

Safaricom Staff Pension Scheme Board of Trustees Chairman Joseph Ogutu said that Crystal Rivers Mall is now expected to be ready for occupation and open for business in mid- 2017 with about 30 per cent occupation already booked.

“Today, we see many of Nairobi city residents, including many of my colleagues, moving to the peripheral of the city in search of the perfect living space for our families. We have seen tremendous population growth in Syokimau, Athi River, Kitengela and even Embakasi. More industries and businesses continue to come up here in line with our growing economy, most notably, the Standard Gauge Railway station. As the population of these regions continues to grow, and as our children grow, there will be demand for sustainable living, recreational and working spaces,” explained Ogutu.

The townhouses and apartments are set to be complete by 2018 with already 10 per cent occupancy. Apartments will retail at Sh 8 million while the townhouses will retail from Sh14 million. The mall will accommodate at least 1000 vehicles while introducing SMART CITY installations for integrated internet and WIFI Internet access.

In total, the mall provides for the largest single parking area in the County with 700 spaces on both the lower ground and upper ground floors. In addition to Crystal Rivers, the Safaricom Staff Pension Scheme is also investing in Mandharini, an award-winning luxury development in Kilifi County.

Source; https://www.capitalfm.co.ke/business/2016/12/safaricoms-sh4-3bn-machakos-real-estate-project-to-open-in-6-months/

Bad loans put Shelter Afrique boss in eye of a raging storm

Mr James Mugerwa, Shelter Afrique’s managing director. PHOTO | FILE 

By DAVID HERBLING, hdavid@ke.nationmedia.com

Posted  Monday, October 31   2016 at  18:54

Source; http://www.businessdailyafrica.com/Corporate-News/Bad-loans-put-Shelter-Afrique-CEO-in-the-eye-of-a-raging-storm/539550-3436558-item-0-o4t6s3z/index.html

Top managers at pan-African housing financier Shelter Afrique have been thrown into the eye of a storm after documents emerged showing massive looting of funds through creative accounting and subprime lending that is now under investigation.

Documents seen by the Business Dailyshow that the company’s managing director, James Mugerwa, has been dishing out subprime mortgages to unqualified borrowers resulting in a steep rise in the company’s non-performing loans.

At least 59 per cent of Shelter Afrique’s $246.3 million (Sh24.63 billion) loan book was classified as non-performing by February 2016, according to documents addressed to the lender’s board of directors and financiers.

Jean Paul Missi, chairman of the Shelter Afrique board, acknowledged receipt of the documents and promised appropriate action.

“The board asserts that the allegations are taken seriously and will give them appropriate attention,” he said, adding that the organisation is committed to complying with the highest international standards, best practices, and its policies.

The documents show that Shelter Afrique has been restructuring overdue loans by rescheduling such facilities to appear and making them appear as performing, effectively suppressing the volume of toxic mortgages.

“The loans are restructured multiple times to ensure they are not classified as non-performing and are therefore hidden NPLs that are not disclosed,” information sent to the board dated September 8, 2016 says.

Shelter Afrique is also said to be borrowing to pay debt and not to finance new investments or lending, turning it into a pyramid or Ponzi scheme.

Kenyan taxpayers control 10.63 per cent of Shelter Afrique, which is owned by a total of 44 African countries together with the African Development Bank and African Reinsurance.

Housing and Urban Development principal secretary Aidah Munano represents Kenya on the Shelter Afrique board. The PS, however, refused to answer any questions on the alleged irregularities despite the fiduciary duty she owes the taxpayers. 

Mr Mugerwa is also accused of presiding over a creative accounting regime that has subdued provisions for bad loans, and refused to provide sufficient impairment for the $4.1 million Shelter Afrique had in the collapsed Chase Bank.

Consulting firm Deloitte has been hired to carry out a forensic audit as well as replace Ernst & Young as Shelter Afrique’s external auditor.

The list of Shelter Afrique’s big debtors includes Nairobi’s Taj Mall, Translakes Estate in Kisumu, Eden Beach Resort in Shanzu, and Oakpark Properties’ Pine City in Athi River.

Consequently, Shelter Afrique has seized 11 apartments at Eden Beach, 17 houses and land belonging to Oak Park under an “asset swap programme” and has classified these properties as “held for sale.”

Mr. Mugerwa is further accused of wasteful and questionable spending that has seen him vary by more than three-fold the cost of repairs at his residence, splurging more than € 30,000 on house furniture which internal auditors couldn’t trace, making double per diem for foreign trips, buying six smart phones in eight months, and arbitrarily sacking junior staff.

The Shelter Afrique boss’ profligate spending is evidenced by the Sh739,010.14 phone bill he incurred in the month of May 2015 for one of his mobile phones, according to a postpaid bill from Safaricom.

Mr Mugerwa — who took office in August 2014 after the acrimonious exit of Alassane Ba — did not respond to questions on the state of the company’s finances.

Ernst & Young, who have been the external auditors at Shelter Afrique for the last five years, also declined to respond to questions of professional misconduct in handling the lender’s books.

Shelter Afrique enjoys diplomatic status and is not regulated by any authority – meaning it has no legal guidelines on capital adequacy, risk management and corporate governance. 

Kenya poised for another first in mobile money revolution

Kenya is poised to enter a new mobile money economy era, judging by the steady rise in cashless transactions for goods and services.A new study by consultancy firm Deloitte says Kenya is ripe for a mobile money revolution and urges local businesses to align their sales models with the emerging reality to stay ahead of the competition.The impending mobile payments revolution marks yet another first for Kenya, which has been a front-runner in mobile payments backed by innovations such as mobile money transfer service, M-Pesa.The Deloitte report says the continued uptake of mobile payments by consumers has reached a critical point where it is posing a threat to traditional retail models based on cash payments.

The study found that 11 per cent of Kenyan consumers are already using mobile payments – more than five times Nigeria’s two per cent, nearly three times South Africa and Uganda’s four per cent and ahead of Zimbabwe’s seven per cent.The figures represent only transactions paid for using mobile money, and excludes mobile money transfers.

The Deloitte study also found out that Kenya remains way ahead of its African peers on the use of mobile money transfers. The study found that 33 per cent of Kenyans are making mobile transfers compared to Nigeria’s 11 per cent, South Africa (15 per cent), and Zimbabwe (11 per cent).Kenyan consumers were also found to be adopting mobile money faster than their African peers, placing the country in pole position to becoming the region’s first digital economy. “The level of adoption of these services is currently low and the gap represents a significant monetization opportunity for operators,” the Deloitte report says, adding that 50 per cent or more of the mobile phone users had demonstrated a willingness to go cashless.

The report urges businesses to tap the anticipated mobile money opportunities by investing in understanding consumer behaviour to stay ahead of the competition. “The holy grail of retail right now is understanding shopper behaviour live. As they move around you want to impact their decision to buy while they are in the store,” Deloitte Advisory Leader for East Africa Rodger George said when he released the report on consumer trends.

Prof George, who is also a visiting professor at the University of Cape Town’s Graduate School of Business , said Kenyan businesses must do more to tap into the huge opportunities that are emerging in the mobile phone economy. Use of mobile phones has become an integral part of Kenyan lives, a development that is confirmed by the fact that they interact with the devices more than other users in any African country.

The study found that 71 per cent of Kenyans look at their phones within five minutes of waking up with a further 53 per cent looking at their phones before sleeping. Besides, 40 per cent of Kenyans use their phones in public transport while 28 per cent use the devices while watching TV.

Retail Trade Association of Kenya chief executive Wambui Mbarire urged retailers to align their business models with the emerging reality. Tifa Research director Maggie Ireri said businesses that fail to adopt the changing model risk losing out to rivals or perish altogether. “The widespread use of mobile phones will have a profound effect on ways businesses operate, making it imperative to respond accordingly,” she said.

The opportunity to tap mobile phone use is expected to increase as more Kenyans adopt smartphones backed by strong economic growth as operators increase their investment in mobile data networks. “As smartphones become ever more embedded in our lives, we see new opportunities and challenges for the mobile sector, retailers and advertisers,” said Deloitte. Some 53,000 respondents across 30 countries, including South Africa, Nigeria, Kenya, Uganda and Zimbabwe were surveyed.

Source;  http://www.businessdailyafrica.com/-Kenya-ahead-of-rivals-as-African-retail-goes-digital/539552-3421704-item-0-y8rh1v/index.html