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East Africa registers Eight corporate deals worth $80.2 million in May

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About eight major corporate transaction deals worth $80.2 million (KSh8.1 billion) were done in the East African region, up from 5 transactions in April.

Out of the 8 transactions, 5 involved Kenyan firms according to a report by I&M Burbidge Capital. Some of the notable deals in May are; Actus Education Holding Private Equity investment in Riara group of schools for a 22.3 per cent ownership stake, CDC Group $68.2 million (KSh6.9 billion) investment in the Malindi solar park, Tenlot Group’s acquisition of 85 percent stake in Kenya Charity Sweepstake, and Engie RDE $12 million (KSh1.2 billion) investment in Kenyan biogas company Sistema Bio.

As per the report, 34 corporate investments worth more than $859.4 million (KSh86.8 billion) have taken place since the start of the year. The transactions involve mergers and acquisitions, private equity investments, private equity exits, and joint ventures. Financial Services sector registered the highest number of deals followed by the health sector and energy, oil, and gas sector. Education and ICT sectors also booked a high number of corporate transactions.

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The region has the fastest economic growth rate in Africa. In 2019, East African economies are projected to expand at an average rate of 6.1 per cent compared to a global average of 3.3 per cent. Additionally, the economies are well diversified and therefore shielded from the global economic challenges such as fluctuating oil prices and trade tensions between China and the US.

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State shifts focus to fault lines in bid to tame building collapses : The Standard

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The government is developing a database that captures buildings built on or near active fault lines.

This as the State seeks a more solid solution to tame incidents of collapsing, cracking and sinking of buildings across the country.
The move, officials say, is informed by the realisation that the increased cases of buildings tumbling down and killing people in some instances could after all not always be as a result of poor workmanship or substandard building materials.
According to Lands Principal Secretary Nicholas Muraguri, the real problem might be buildings being put up on or near geological faults.
Dr Muraguri said as a result when the earth oscillates on its axis or any disturbance occurs against the fault line underground, the derivative pressure brings the buildings down.
He said the ministry has mapped areas associated with the faults as it moves to reduce the grave risks they pose on human lives and investments.
“The collapse risks present themselves not only in possible earthquakes but also in volcano eruptions, tsunamis and landslides,” said Muraguri.


Teachers want national exams cancelled – The Standard  

He said his ministry is collaborating with that of environment to build the database that will mark all areas that are prone to such risks.
“We are concerned that we do not have accurate data on all fault lines. That we are very close to a geological fault, that is the Rift Valley, is not in dispute. We also have volcanic mountains that can erupt. We need to have this data recorded to guide our developers,” said the PS.
Some of the volcanic hotspots in the country include Mt Elgon, Mt Kenya, Longonot, Marsabit, Menengai, Nyambene Hills, Olkaria, Ol Doinyo Eburru, Elmentaita Badlands, Chyullu Hills and Mt Suswa. 
He said the working team on the project to map out the areas includes geologists, seismologists and volcanologists, who will come up with a national action plan to guide developments on all areas categorised as “geologically risky”.
Muraguri said the policy guidelines by the team will provide direction on land use and planning approaches to help local authorities as the custodians of the Building Code minimise the risks and the time it takes for individuals, communities and the government to recover from fault lines-associated disasters.
He said the multi-agency team will identify active faults in the country and record them on maps that are at the right scale to create fault hazard avoidance zones.
Such zones, the PS said, will be areas created by establishing a buffer zone on either side of the known fault trace or the identified likely fault rupture zone.
“We will recommend a minimum buffer zone that will not be open to buildings on either side of the known fault trace or likely fault rupture zone,” he said.
Further, evaluation on possible fault rupture and associated risk within each fault avoidance zone will be analysed to inform disaster response teams on best action plan to be employed should a building come down, crack or sink.
For the buildings already built on such hazard zones, Muraguri said, the data will help in disaster preparedness and also in recommending any precautionary measures to be taken by developers.
“We will use the data captured to recommend any beefing up of structural safety on such buildings and those deemed to be high risk for human occupation be condemned.
Kiambu Lands, Housing and Physical Planning Executive James Maina welcomed the new development, saying all counties should start demanding geotechnical analysis of soils in their areas before approving building plans.
“We are already doing it in Kiambu. All development plans must have a copy attached detailing the geological environment under the immediate neighbourhood of the particular land. We are faring on well since we have seen geological experts opening offices in Kiambu,” he said.
Council of Governors Deputy Chairman and Murang’a Governor Mwangi wa Iria, however, told Home&Away that the counties cannot carry out meaningful analysis on fault lines. “The country has very few geologists and even if we were to pass the burden of proving to us that the building plans that developers present to us for approval are devoid of risks associated with underground scientific pulls and pushes, we will only concede on paper value but not on evidence,” he said.
Wa Iria said the central government should take the lead in ensuring developed units have enough geologists who would then be seconded to the counties to protect the building and construction industry from the “enemy under the soil”.
Kiambu-based geological consultant Wycliffe Omuswa said the initiative is likely to encounter teething problems. “It must be appreciated that there is no technology that can be employed to prevent earthquakes damaging buildings built across faults. The best way to avert tragedies that arise from such a risk is to avoid building on fault lines,” he said.
Mr Omuswa said currently, no level of government has any policy guideline about seismic hazards despite their delegated responsibilities for subdivision and land use as well as in approving building plans.
“What we have are ad hoc disaster response and management units that jump to action on a need basis. We do not have a national plan about disasters and no central command is identifiable. You will see the military clashing with the National Youth Service or with such units like Sonko Rescue Team in times of tragedies,” he said.
“We are at zero chance when dealing with such threats that might occur from underneath earth’s disturbances.”  Omuswa said practical guidelines are urgently needed to reduce the risks associated with fault rupture.  
[email protected]  

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Absa Gold ETF Hits all-time High Market Turnover at NSE –

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Latest data from the Nairobi Securities Exchange reveals that the New Gold ETF achieved an all-time high turnover of Ksh66 million on Monday 30 March. The overall turnover in the day was Ksh 804 million with the Gold ETF contributing 8.15%.

The NewGold issuer (RF) Ltd, a subsidiary of South Africa’s ABSA, became the first ETF issued in East Africa in 2017.

READ; How to invest in the Barclays NewGold ETF

ETFs are a type of listed open-ended index or unit instrument bought or sold on a securities exchange. The index or unit may be composed of ordinary stocks, bonds, commodities, futures or a combination of real assets with the objective of allowing for exposure to a portfolio of securities, assets or indices whose price movement is in tandem with the price movement of the constituent underlying securities or commodities. An ETF can be a domestic or offshore product.

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Landlords stare at massive dip in rentals incomes : The Standard

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An aerial view of planned housing units for rental and private residence in middle class area of Nairobi. [File, Standard]

Joe sells bootleg movies out of a stall on a building along Moi Avenue. Before the coronavirus pandemic hit the country, when Kenyans walked around without caution, he would easily sell about 200 movies, making enough cash to pay rent for the stall.

He could easily take care of his livelihood and even send something back home.
As the reality of Covid-19 settles and subsequent measures such as the government advisory on social distance and a curfew, he is lucky if he can sell 20 movies.
Previously, he used to close shop at 9pm but today, his hours have been disrupted following the curfew. He closes early, at 3pm to get a matatu back home on time.

SEE ALSO: Struggling Fiorentina fires manager Montella

He says making rent this coming few months will be hard, almost certain that he will default on his April rent. His landlord hasn’t communicated anything despite noting most businesses in the building have shut down.
Joe says the landlord should brace himself for massive defaults. “Honestly I can’t make the rent. This means it will be rolled over and I’ll be working to pay debts,” he said, adding that paying taxes to Nairobi County government will also be a tall order.
While Joe’s landlord appears to bury his head in the sand, delayed rent payment is something that he has to confront in the coming weeks.


Teachers want national exams cancelled – The Standard  

It remains a tough period for landlords in the country as coronavirus scare continues to wreak havoc on incomes, hence eroding tenants’ ability to pay rent. So far, more than 60 people have been confirmed to have the virus.
So tough is the going for homeowners that several landlords’ associations in the country estimate that by June, the strain on rental yields will have hit between 60 and 70 per cent for the low-cost rents and between 10-30 per cent for the middle-income earners.

SEE ALSO: Parents want Egerton stopped from imposing fine on students

This as the impact of unpaid leaves or the slowdown in business for the self-employed hits home.
Different firms across sectors last month sent employees home, with the lucky ones being on paid leave. But for many who are engaged on a casual basis, this might mean several months of unemployment.
While sectors such as tourism, aviation and horticulture stand out as among the most affected, the impact of Covid-19 cuts across all sectors.
The overall impact will be high default rates on rental payments. This will further hurt property owners, many of them already living on the edge, going by a large number of defaults on loans advanced to property owners as well as the number of houses being put on auction.
Landlords who spoke to Home&Away admitted that they have now resigned to fate as they join the nation in hoping for recovery from the crisis – that a quick reprieve visits the country sooner.

SEE ALSO: Iachini appointed Fiorentina coach

The unique challenge in meeting rental obligations in some areas is cited to be premised in the barmaids and commercial sex workers legion that has been struck hard by bar closures and the national curfew – effectively locking them out of income.
According to Urban Tenants Association of Kenya Secretary General Ephraim Murigo, landlords will have to face reality that “it is not business as usual”. “The going is tough and as everyone is being called upon to belt up, landlords are not exempted,” he noted.
He says the strife on rental yields is premised on the closure of most economic avenues that earn tenants some income. The closure of major businesses and firms, he noted, has driven many workers into temporary poverty.
“It is in light of this that we as an association anticipate that the low-end housing units might suffer as high as 70 per cent rental defaults by May if the situation does not subside, with the mid-level rental segment suffering up to 30 per cent default by the same period,” Murigo preempts.
He says most jua kali sector work stations have been closed, with many low-cadre jobs in industries locked. Small Medium Enterprises (SMEs) have also been starved off workforce and markets.

SEE ALSO: Kiplagat kin faces eviction after court awards woman

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“When this happens, both national and county gross produce suffers and the prevailing economic environment is that of poverty. At the social front, what Covid-19 scare has induced is panic. All these are serious economic forces that erode both investments and returns,” Murigo said.
He urged all landlords to “exercise patience, humaneness and be willing to make concessions that offer tenants a reprieve”.
Maragua MP Mary Wa Maua urged landlords to give tenants rental rebates.
“I propose that all tenants who can meet their rental obligations to pay up. Those who have genuinely suffered economic setbacks be given the rebates in form of rental reductions or total waivers for the period the country will remain under siege by this global scourge,” she says.
Wa Maua promised to moot a National Crisis Relations Bill-19 that provides legal guidelines on how the economic front should relate with the social front in times of a crisis. She says the proposals should compel all multinationals in the country to channel 100 per cent of their social corporate responsibility budgets to the crisis.
She said the proposed bill could require that all landlords who are subjected to land rate taxes be given a 100 per cent waiver to cushion them on rental strains while basic amenities like water, electricity and internet bills for their buildings be zero-rated.
Senate Majority Deputy Chief Whip Irungu Kang’ata says most Murang’a born landlords have since admitted that the going is tough and will offer a reprieve to their tenants.
“As Murang’a Senator who also is aware of the big share my native investors in major towns real estate enjoy, it is good news that so far, there are many who have since placed notices that they have halved or waived rents for the period running from March to May,” he said.
He urged the State to subsidise the real estate sector so that landlords can reciprocate by also extending rental subsidies to tenants in times of crisis.
Council of Governors Deputy Chair Mwangi Wa Iria told landlords at county levels to be lenient to their tenants.
“We as county governments will be interested parties in how relations between landlords and tenants play out during this difficult period. We will be interested to know what will be happening in all arbitration sittings involving rental defaulters. We must safeguard the vulnerable in such times of distress,” he said.
According to Nairobi Regional Coordinator Wilson Njenga, rental panic has been caused by the confirmation of Covid-19 in Nairobi, increasing panic among households.
Limited economic activities and restricted movements have also seen many urban families flock to villages where economic pressures are less, given low rental and dietary budgets.
“As a result, many families have either abandoned their rental homes and retreated to the countryside to get bigger space necessary in combating this scourge as well as give themselves economic reprieve,” he says.
Rift Valley Regional Coordinator George Natembeya told Home&Away that Kenyans are also contributing to rental flight owing to their tendencies to stigmatise others in a humanitarian crisis.
Both administrators called upon landlords to be sensitive to families facing restricted earning avenues and constrained budgets.
Mr Natembeya urged landlords to extend tenancy arbitration on rent defaulters to eight months instead of the usual three.
Last week, it emerged that more than 120,000 flower farm workers were last month sent home on paid leave owing to lack of market for flowers. The situation could change into a long unpaid leave if the situation remains.
Dozens of hotels have also suspended operations as occupancy levels plunge, leaving their staff idle. Some have indicated that it will be months before they reopen as it will take time to get bookings even after the world has been able to contain Covid-19.
And it is not just the tourist hotels but also the ordinary eateries that cannot sustain operations because of reduced human traffic.
With little travel locally and a total ban on flights to and from Kenya, the aviation industry is also bleeding.
The impact that coronavirus will have on the economy this year comes after 2019 that was also difficult for the economy and numerous companies saw their profit fall.
Additional reporting by Wainaina Wambu and Macharia Kamau   
[email protected]  


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