Pump Prices Up Again
Pump prices breach the KES 200 per litre mark for the second time
👋 Welcome to The Mwango Weekly by Mwango Capital, a newsletter that brings you a succinct summary of key capital markets and business news items from East Africa.This week, we cover Kenya’s pump prices for the October to November 2023 cycle and the IMF/World Bank meetings in Marrakech, Morocco.This week's newsletter is brought to you by:
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Kenya’s Pump Prices Rise Again
Another Rise: Kenya’s pump prices have risen yet again in the Oct/Nov 2023 review. Super petrol, diesel, and kerosene have increased by KES 5.72, KES 4.48, and KES 2.45 per litre respectively, as announced by EPRA on 14th Saturday, 2023. This is the second time Kenya’s pump prices have breached the KES 200 per litre mark following the historic increases in the Sep/Oct 2023 review that saw super petrol, diesel, and kerosene retail at KES 211.64, KES 200.99, and KES 202.61 respectively.
Stabilisation Returns: Following the reinstatement of subsidies in the Aug/Sept 2023 review and a withdrawal in the Sep/Oct 2023 review, the government’s stabilisation programme has now returned in the Oct/Nov 2023 at KES 3.07, KES 11.64, and KES 9.60 for super petrol, diesel, and kerosene respectively.
“In order to cushion consumers from the spike in pump prices as a consequence of the increased landed costs, the Government has opted to stabilise pump prices for the October - November 2023 pricing cycle. Oil Marketing Companies (OMCs) will be compensated for the under-recovery of costs from the Petroleum Development Levy (PDL) in line with the PDL, Order of 2020.”
EPRA
IMF/World Bank 2023 Meetings
The annual IMF-World Bank meetings were held in Marrakech, Morocco this past week. Of note in regards to Kenya, were the discussions around the country’s repayment of the USD 2.0B Eurobond.
Redemption Options: According to the Central Bank of Kenya (CBK) Governor, Dr. Kamau Thugge, Kenya plans to repurchase $500M of the Eurobond before the end of this year after completion of talks with regional banks to syndicate $500M - $1B in commercial loans. The institutions identified for the syndication are the Trade and Development Bank and the Afreximbank.
"We would use part of that for the buyback, for the liability management, and the rest would be for the budget support. We would like to start as quickly as possible."
Central Bank of Kenya Governor, Dr. Kamau Thugge
Liquidity Crisis: The Cabinet Secretary of the National Treasury highlighted that Kenya is facing a liquidity crisis and is currently at an inflection point in terms of the management of the liquidity crisis considering its potential to pose solvency risks:
“I told the IMF we have a liquidity crisis and that is also happening in our markets and every African market is in the same way, we cannot even raise debt. But it is not a solvency problem, but how we resolve the liquidity crisis because we have to tighten monetary policy and all that, how we solve it must also make sure it is congruent or convergent with where we want to go with our solvency ratio. It should not worsen or create any solvency issues. And this is where we are. We have to recognize the weaknesses we have in our economies given the kind of shocks that we have gone through, some shocks are still continuing for example the Ukrainian crisis and supply side.”
Cabinet Secretary for the National Treasury, Prof. Njuguna Ndung’u
IMF to Visit Kenya: IMF’s head of the African Department pointed out that the IMF will do whatever it can to support Kenya in terms of the options available for settling upcoming maturities in 2024. In this respect, there will be a team visiting the country this week to engage Kenyan authorities on the modalities around the management of the upcoming maturities.
“So, Kenya is one of these economies that has been trying to do all the right things in the wake of the pandemic, and as it's been assailed by all of these very difficult exogenous shocks. We're very encouraged that the government is very proactively working on a number of options to address the maturities that they have falling due next year. I think they've been communicating around that. And of course, we will do whatever we can to support them. We have a team going out next week that will engage in very proactive discussions, and we'll be forward-leaning to make sure that Kenya continues to be on the right track.”
IMF African Department Director, Abebe Aemro Selassie
Outlook: In its October 2023 regional economic outlook for Sub-Saharan Africa, the IMF projects Kenya’s GDP to grow by 5.0% in 2023 and 5.3% in 2024 compared to 4.8% in 2022. The GDP growth projections are significantly higher compared to the SSA projected averages of 3.3% and 4.0% in 2023 and 2024, respectively. Across East Africa, Rwanda is projected to have the highest growth rates at 6.2% and 7.0% in 2023 and 2024, respectively.
Markets Wrap
NSE: In Week 41 of 2023, Liberty was the top-performing stock, up 11.1% to close at KES 4.00. Olympia was the worst-performing stock, down 14.2% to close at KES 2.90. The NSE 20 index increased by 0.1% to 1,492.2 points, the NSE 25 fell by 0.8% to 2,436.0 points, and the NASI index fell by 0.1% to 93.4 points. Equity turnover went down to KES 469.02M from KES 1.1B prior week while bond turnover was down 58.5% to KES 3.5B from KES 8.4B prior week.
Treasury Bills: The weighted average interest rate of accepted bids for the 91-day, 182-day, and 364-day were 14.9604%, 14.15.0231%, and 15.3368% respectively. The total amount on offer was KES 24B with the CBK accepting KES 40.9B of the KES 43.2B bids received, to bring the aggregate performance rate to 180.15%. The 91-day and 364-day instruments recorded 937.42% and 29.63% performance rates, respectively.
Treasury Bonds: The reopened FXD1/2023/002 and FXD1/2023/005 recorded performance rates of 18.59% and 16.55% respectively attracting bids worth KES 6.5B and KES 5.7B respectively, against a cumulative KES 35B sought, after being revised downwards from KES 55B. The CBK accepted KES 4.8B and KES 1.4B respectively and the market-weighted average rates were 17.9% and 18.46%, respectively. In aggregate, the performance rate was 35.14% with KES 6.3B of KES 12.3B accepted.
Eurobonds: In the week, yields fell across the 6 outstanding papers.
KENINT 2024 fell the most week-on-week, down by 373.3 bps to 14.612%, while KENINT 2048 fell the least, declining by 45.8 basis points to 12.372%. The average week-on-week change stood at -113.85 bps.
KENINT 2028 rose the most on a year-to-date (YTD) basis, appreciating by 298.9 bps to 13.301% while KENINT 2048 rose the least at 154.8 bps.
Prices rose across the board week-on-week, with KENINT 2048 gaining the most at 3.7% to 68.448. KENINT 2027 appreciated the least at 2.5% to 85.355. Year-to-date, KENINT 2024 was the only price that rose, appreciating by 2.8% to 95.088. The largest price losses were 14.2% for KENINT 2034 at 14.2% to 66.526. The average price change week-on-week and YTD was -7.77% and 3.08%, respectively.
Market Gleanings
📝 | AA Kenya RPO | The Automobile Association of Kenya (AA Kenya) has announced a Restricted Public Offer (RPO) to raise capital from its shareholders. The RPO is restricted to AA shareholders and staff and will run from October 11 to November 27, 2023. Following the RPO, AA Kenya plans to list by introduction on the Main Investment Market Segment (MIMS) of the NSE. The RPO is part of AA Kenya’s ongoing restructuring, which is in line with its strategic plan for 2022-2026, with a key focus on diversification, expansion and global alignment to Federation Internationale de I’Automobile ( FIA) standards.
📈 | NCBA Adjusts Base Lending Rate | NCBA Bank Kenya has announced an increase in its base lending rates from 13.0% p.a to 14.50% p.a for Kenya shillings and from 10.50% p.a to 11.0% p.a for the US dollar, effective 8th November 2023. This change will not affect fixed-rate loan facilities, but the interest rate on loan facilities priced off the NCBA Bank’s base lending rate will increase by 1.5% p.a for KES-denominated loans and 0.5% p.a for USD-denominated loans.
💸 | ABSA Ups Timiza Transaction Limits | Absa Bank Kenya has made changes to its Timiza wallet, increasing the limit for its customers. The maximum amount for a single transaction has been raised from KES 150,000 to KES 250,000. Additionally, the daily transaction limit has been increased from KES 300,000 to KES 500, 000. These changes align with recent modifications in mobile money transaction limits and aim to meet evolving customer needs.
🏦 | Shelter Afrique Restructuring | Shelter Afrique, a pan-African housing finance corporation has transformed into Shelter Afrique Development Bank (ShafDB). This was achieved during the Extraordinary General Meeting (EGM) of Shelter Afrique held in Algiers, the capital of Algeria between 4th-5th of October 2023. The transformation is expected to significantly enhance the banks’ financing capacity for affordable housing projects across Africa, with the bank focusing on collaboration, innovation and sustainability to transform the housing sector in Africa.
💰 | September 2023 Tax Collections | In September 2023, total tax revenue grew by 6.5% year-on-year to reach KES 196.7B, while in Q1 of FY 2023/2024, tax revenue totaled KES 514.3B, up 10.7% from 2022.
📆 | Airtel Uganda Extends IPO Offer Timetable | Airtel Uganda has extended the offer timetable for its initial public offering (IPO) and the subsequent listing of its shares on the Uganda Securities Exchange (USE). The offer will now close on October 27, 2023, and the listing of shares on the Uganda Securities Exchange will now commence on November 7, 2023. The Offer price, Offer shares and other terms and conditions of the offer remain unchanged.
📜 | NBE’s Payment Instrument Issuer Directive | The National Bank of Ethiopia (NBE) has issued a revised payment Instrument Issuer Directive for mobile money providers. The directive is aimed at expanding mobile money services and digital payment solutions to support financial inclusion while safeguarding consumer protection. The revised directive raises the daily electronic account balance limit from Birr 30,000 to 75, 000 and introduces a new daily aggregate transaction limit of Birr 150, 000. It also allows mobile money service providers to facilitate additional services such as capital market products and enables banks to establish subsidiaries focused on providing mobile money services.
Chart of the Week
