East Africa Economic Report

I stumbled on two interviews involving Prof. Paul Krugman, a Nobel Price Laureate in Economics, regarding Zombie ideas. As the name suggests, Zombie ideas are just that –dead but revived by interest groups. The Professor mentioned a few Zombie ideas including Universal Health Care (Obama care) in the US which was opposed as unworkable but which has provided health care for an additional 20 million Americans.  This one struck a chord with me given the noise against Taifa Care in Kenya.  This is a health insurance plan designed to provide UHC to a greater proportion of Kenyans. Its an upgrade of the age-old NHIF which provided limited health care insurance. But it is facing sustained opposition from some Kenyans. Although data shows that the uptake is positive, having registered an estimated 18.2 million Kenyans,  compared to nearly 4.6 million under NHIF, the opposition, which is a zombie idea,  still persists. Yet if numbers were a measure of popularity, then S...

The metamorphosis of the Kenyan shilling from the worst-performing currency in the world in 2023 to the best-performing in 2024 turned chronic loss makers into profit generators. Two of the largest forex consumers in Kenya posted significant profits due, in part, to the rebound of the Maasai. Kenya Airways and Kenya power and lighting Company turned black. Both firms attributed part of the good fortune to the rebound in the shilling’s value in addition to improved business. Kenya Airways for instance, which last made profits in 2013, made a significant KES 513 million in the half-year to June 31, 2024. Also KPLC, which had posted KES 4.4 billion loss in 2023 posted a massive KES43.46 billion profit last year. The Kenya Airways, management and its Board could not hide their glee as they announced the return to profits after a decade-long lean period. In fact, the Chairman, Michael Joseph, branded it “a milestone.” Over the same period in 2023, the airline posted a huge KES 21.7 ...

 Gold trade in East Africa is interesting: Countries that produce gold in thousands of Kilograms export tons of gold. Countries that do not feature among the top gold producers in Africa, produce more gold than countries listed as top gold producers.  Three years ago, this publication noticed that Tanzania exported a lot of Gold to Burundi and Uganda between May 2020 and June 2021.  At the height of Covid-19 lockdowns, the two countries’ exports outside EAC were in negative territory. Burundi’s extra EAC trade was negative 7 percent in May 2020 while Uganda’s was negative 54 percent. Then in June of that same year, Burundi’s extra-EAC trade rose sharply to 67 percent, and an astonishing 804 percent in July, before declining to 54 percent in September, according to a Trade Mark East Africa (TMEA) Report. Uganda’s exports too, rose from negative 54 percent in May 2020 to 15 percent in June, 31 percent in July, and declined to 16 percent in October. The sudden increase...

  Even before they were red-inked, Kenya's Adani Infrastructure development deals had generated more heat than sense. The calls for their rejection began in mid-October when a Senator alleged in the Senate  that the International Airport in Nairobi “had been sold.” He did not provide any evidence to back his claim. Soon the hysteria spread like a bush fire with all sorts of people decrying the alleged sale. At the same time, Adani inked a contract to build electricity transmission lines on a PPP basis. This outcry, which many observers suspected to be a political red herring, exposed the level of hypocrisy or ignorance of the legal profession in Kenya. The Law Society of Kenya rushed to court seeking to stop the alleged sale. What the LSK did not tell us is that the Airport deal was at the proposal stage—that it had just entered the ground floor of a five-floor process. A proposal faces many landmines on the way and can fail at any point before a contract is signed. For in...

  The Financial Market in East Africa is gradually being indigenized, we can report. In Kenya and Tanzania, indigenous banks have taken over the domestic market, shunting foreign banks to the periphery. We can also report that Kenya is the financial hub of Eastern Africa, an analysis of the H1 2024 financial reports of the leading banks shows. Their Asset base is also growing, meaning they are entrenched in the market.  Generally, the Capital base for all top banks has doubled in the last five years. In 2019, Kenya’s KCB had a capital base of US$8.6 billion. As at the end of H1 2024, the capital base stood at $17.17 billion, while Equity’s asset base grew from US$6.8 billion in 2019 billion to $13.7 billion in the first half of this year. In Tanzania, CRDB has more than doubled its asset base from $2.52 billion in 2019 to the current $5.7 billion, while NMB, the second largest bank in Tanzania, has seen its asset base grow from $2.36 billion in 2019 to the current $5.0...

EGHL Headquarters  Four years after a spree of Mergers and Acquisitions, the two leading Kenyan banks dominate the financial market in the East Africa Common Market region. The two, KCB Group and Equity Holdings Group Plc boast a whopping capital base worth KES 3.42 trillion( US$ 23.5 billion).  KCB claims the top perch with a capital base of 1.86 trillion(US$12.75 billion) as at the end of June 2023 while Equity boasts 1.56 trillion($10.7 billion) at the current rates, over the same period.  So dominant are the two that they dwarf their local competitors. For instance, NCBA Group which ranks third among the first-tier banks in Kenya, at a capital base of KES 660 billion, is less than half the wealth of the Equity Group and just about a third of KCB group’s wealth. So large is their wealth that they stand neck on neck with the GDP of some smaller countries in the region.  KCB Group Headquarters For instance, KCB Group's capital base could hit the US$13 billion mar...