Browse the complete Report on: Kenya Shipping Report Q3 2010
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Congestion continues to be a problem at the Kenyan port of Mombasa with the country's revenue authority the latest in the line of fire for holding up the passage of goods through the port. The global economic downturn, which sent trade volumes falling, appears to have lead to little respite at Mombasa with tonnage throughput at the port growing by an incredible 16% year on year (y-o-y) in 2009. While container volumes plummeted at most ports Mombasa's box throughput remained stable, with a slight yo- y increase of 0.5%
BMI fears that congestion will be an ever increasing problem at the port of Mombasa in the mid term as we project volumes through the port to continue growing. In 2010, we predict a y-o-y growth of 7.98% in total tonnage throughput and an increase of 3.4% in box volumes. Over the rest of the mid term (2011- 2014), BMI's Shipping desk projects that total tonnage and containers will grow by a yearly average of 7% and 7.5% respectively.
BMI believes that this mid-term growth will place further strain upon the port of Mombasa and while we are encouraged that a second container terminal is planned for development at the port in the mid term, we believe that Kenya's maritime sector will continue to struggle until the sector is diversified. We therefore feel that the development of the port of Lamu could be the answer to congestion problems in Kenya's port sector. The project, which is currently at the feasibility study stage, envisages a new port facility with a draught of 18m, therefore allowing Kenya's maritime sector to cater for the next generation of larger vessels, which are coming online.
The port, however, is not due for launch until 2016 so BMI fears that shippers face continued delays at Mombasa with the problem likely to worsen as Kenya's trade increases. BMI's Country Risk team forecast that the country's exports will grow by a yearly average of 5.8% between 2010-2014, while imports are projected to increase by 3.5% over the same period.
On top of this, trade volumes of Kenya's landlocked neighbours, Uganda, Rwanda and Burundi are also expected to increase over the midterm placing further pressure on the port of Mombasa.


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Browse the complete Report on: Kenya Power Report Q3 2010

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In this new Kenya Power report, we forecast that the country will account for just 0.62% of Middle East and Africa (MEA) regional power generation by 2014, with efforts to diversify supply away from hydroelectricity. BMI’s MEA power generation estimate for 2009 is 1,225 terawatt hours (TWh), representing an increase of 1.9% over the previous year. We forecast an increase in regional generation to 1,572TWh by 2014, a rise of 23.2% between 2010 and the end of the forecast period.
Thermal power generation in 2009 is estimated by BMI at 1,064TWh, accounting for 86.9% of the total electricity supplied in the region. Our forecast for 2014 is 1,293TWh, suggesting 18.8% growth in 2010- 2014 that reduces slightly the market share of thermal generation to 82.3% – thanks partly to environmental concerns that should promote renewables, hydroelectricity and nuclear power generation. Kenya’s thermal generation in 2009 was an estimated 2.3TWh, or 0.22% of the regional total. By 2014, the country is expected to account for 0.21% of regional thermal generation.
Direct burning of wood and waste materials, plus some renewables-based power generation, was the dominant energy source for Kenya in 2009, accounting for an estimated 78% of primary energy demand (PED), followed by oil at 20% and hydro with a near 2% share of PED. Regional energy demand is forecast to reach 1,075mn tonnes of oil equivalent (toe) by 2014, representing 19.3% growth over the period since 2010. Kenya’s estimated 2009 market share of 2.18% is set to reach 2.42% by 2014. Kenya shares fifth place, with South Africa and Iran, in BMI’s updated Power Business Environment Ratings. Its position is vulnerable given the modest size of its market. Growth prospects are good and the proportion of renewables is the highest in the region. However, import dependency is also high and the power sector is not particularly competitive, with limited progress towards privatisation.
BMI forecasts that Kenya’s real GDP growth will average 5.32% a year between 2010 and 2014, with 2010 growth forecast to be 4.20%. The population is expected to expand from 40.0mn to 46.6mn over the period, with GDP per capita and electricity consumption per capita forecast to increase by 75% and 13% respectively. Power consumption is expected to increase from an estimated 5.8TWh in 2009 to 7.8TWh by 2014, providing an improvement in market coverage on the basis of 6.5% average annual growth in electricity generation over 2010-2014. Losses of more than 1TWh during power transmission and distribution mean the market is likely to remain tight for several years.
Between 2010 and 2019, we forecast a 75.7% increase in Kenyan electricity generation, near the middle of the regional range. This equates to 34.0% growth in 2014-2019, up from 31.1% in 2010-2014. PED growth is set to rise from 28.7% in 2010-2014 to 30.8% in 2014-2019, representing 68.3% for the entire forecast period. From 2014, the availability of coal-fired power is one key element of generation growth. Thermal power generation is forecast to rise by 114% between 2010 and 2019. Details of the longer term BMI power forecasts can be found later in this report.


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Browse the complete Report on: Kenya Commercial Banking Report Q4 2010
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Since Q108, we have described numerically the banking business environment for each of the countries surveyed by BMI. We do this through our Commercial Banking Business Environment Rating (CBBER), a measure that ensures we capture the latest quantitative information available. It also ensures consistency across all countries and between the inputs to the CBBER and the Insurance Business Environment Rating, which is likewise now a feature of our insurance reports. Like the Business Environment Ratings calculated by BMI for all the other industries on which it reports, the CBBER takes into account the limits of potential returns and the risks to the realisation of those returns. It is weighted 70% to the former and 30% to the latter.

The evaluation of the Limits of Potential Returns includes market elements that are specific to the banking industry of the country in question and elements that relate to that country in general. Within the 70% of the CBBER that takes into account the Limits of Potential Returns, the market elements have a 60% weighting and the country elements have a 40% weighting. The evaluation of the Risks to Realisation of Returns also includes banking elements and country elements (specifically, BMI’s assessment of long-term country risk). However, within the 30% of the CBBER that takes into account the risks, these elements are weighted 40% and 60%, respectively.

Further details on how we calculate the CBBER are provided at the end of this report. In general, though, three aspects need to be borne in mind in interpreting the CBBERs. The first is that the market elements of the Limits of Potential Returns are by far the most heavily weighted of the four elements. They account for 60% of 70% (or 42%) of the overall CBBER. Second, if the market elements are significantly higher than the country elements of the Limits of Potential Returns, it usually implies that the banking sector is (very) large and/or developed relative to the general wealth, stability and financial infrastructure in the country. Conversely, if the market elements are significantly lower than the country elements, it usually means that the banking sector is small and/or underdeveloped relative to the general wealth, stability and financial infrastructure in the country. Third, within the Risks to Realisation of Returns category, the market elements (ie: how regulations affect the development of the sector, how regulations affect competition within it, and Moody’s Investors Service’s ratings for local currency deposits) can be markedly different from BMI’s long-term risk rating.
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Browse the complete Report on : Kenya Telecommunications Report Q4 2010
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BMI’s Q410 update of the Kenya Telecommunications report contains analysis of the country’s mobile, fixed-line and internet sectors using latest market data released by the telecoms regulator, the CCK, and service providers. Our forecasts for the next five years to 2014 remain unchanged this quarter, as latest statistics largely confirm our expectations for the start of the year.
The 3G market in Kenya is set to become more active with the allocation of licences to Bharti Airtel’s Zain Kenya and Telkom’s Orange. After an extended battle over the price of the 3G licence, Zain Kenya, along with fellow alternative operators Telkom Kenya and Essar, successfully lobbied for a cut in 3G spectrum prices from the US$25mn Safaricom paid in 2007 to just US$10mn. Telkom Kenya is reported to be trialling a 3G service on a pilot basis at a number of sites in Nairobi. Although it is yet to apply for a licence, the director-general of the telecoms regulator expects it to do so soon, a move he believes will increase the penetration of data services through more competitive pricing. Furthermore, the Kenyan government is reported to have extended a shareholder loan to the operator that will help pay for the 3G licence fee.
Meanwhile, mobile services, in the form of Safaricom’s 3G mobile dongles, have become a massive part of the broadband landscape, overtaking fixed broadband connections. BMI has made the decision, across all of our reports, to include the 3G forecasts into the broadband forecast. Of course they are also kept separate as a mobile service that is important to mobile operators, but as they also compete directly with other broadband providers, we feel it is important to include these expected connections here as well. In August 2010, the CCK revised down mobile interconnection fees from KES4.42 (US$0.06) per minute to KES2.21 (US$0.03). The move is aimed at encouraging telecoms operators to lower call tariffs. The CCK aims gradually to reduce the fees to KES0.99 (US$0.013) by 2013. Zain has reacted fastest to the cut in interconnection rates by slashing call rates and SMS costs b y up to 50% and 80% respectively. In June 2010, the CCK initiated the process of mandatory registration of SIM cards and subscribers' details. Kenyan President Kibaki issued a directive in 2009 necessitating SIM registration. The registration of SIM cards will help the government in reducing mobile phone-aided crimes and enhancing national security. Although subscribers were directed to get their details registered by the end of July 2010, failing which their services will be disconnected, no update to this effect was available at the time of writing.
The CCK has announced that the country will introduce mobile number portability (MNP) by December 2010, which will enable subscribers to change their service provider without losing their mobile number. Dutch company PortingXS was awarded a contract by CCK to supply, install, commission and manage MNP services in order to boost competition in the mobile market.
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Browse the complete Report on : Kenya Insurance Report Q4 2010

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This is BMI's second report on Kenya's insurance sector. As is the case with our other insurance sector reports, we seek to place the non-life and life segments in a regional and global context. We discuss the main insurance lines and describe the competitive landscape in some detail.
Kenya provides evidence that the insurance industry can thrive in Sub-Saharan Africa in face of highly challenging economic and – especially – political problems. At the end of 2008, the combined assets of Kenya's 42 insurers amounted to KES146.12bn, or nearly US$2bn. Both the non-life and the life segments sustained double-digit growth over the last five years. One does not need to make aggressive or radical assumptions to produce a scenario where the double digit-growth continues through the forecast period.
The development of the life segment is particularly encouraging. Life premiums account for about onethird of the total. Notwithstanding the fact that Pan Africa, the largest player in the segment, with a market share of around 20%, has a strategic alliance with a subsidiary of South Africa's Sanlam, the segment is dominated by local firms. In essence, Kenyan institutions are gathering long-term savings from Kenyan investors. In this respect, Kenya is hugely different from Nigeria and even from much richer and more stable countries in the Middle East.
As is the case in the Middle East, and to a lesser extent in Nigeria, the insurance industry is strengthened by its links with local entrepreneurs. In 1980, the government introduced laws that required local ownership of the insurance companies. As a result, insurers have since tended to be owned and/or run by local entrepreneurs with a deep understanding of the challenges of doing business in Kenya and well developed tolerance for risk.
A side effect, probably unanticipated by the government nearly 30 years ago, is that Kenya's insurance sector is fragmented. In this respect it is similar to its counterpart in Nigeria, but also the Philippines and Indonesia or the UAE, where local entrepreneurs often see insurance as a valuable adjunct to the other activities undertaken by the family conglomerate. The three largest non-life companies – The Jubilee, APA and Kenindia – together speak for about one-quarter of total premiums written in the segment. APA is the consolidation of Apollo with Pan Africa's non-life operations. However, there is scope for much more consolidation.
AIG's Kenyan subsidiary – now renamed Chartis – is one of the 10 largest non-life firms. It is important to note that foreign insurers are not entirely absent from Kenya. Aside from Sanlam's involvement with Pan Africa, Old Mutual – another giant from South Africa – has a small life operation in Kenya. Four major Indian insurers – New India Assurance, Oriental Insurance, United India Insurance and Life Insurance Corporation of India – are minority shareholders in Kenindia. What all these foreign groups have in common is that, relative to multinational insurance companies from developed countries, they have a high tolerance of emerging markets risk and low exposure to the volatility of capital markets in the wake of the global financial crisis.
Another indicator of the strength of Kenya's insurance sector is that non-life insurance has moved well beyond motor-related lines. Figures published by the Association of Kenya Insurers (AKI) indicate that private and commercial motor insurance respectively generated gross premiums of KES6,102.7mn and KES9,322mn in 2008. The next largest lines were personal accident (KES7,070mn), fire-industrial (KES4,322.7mn) and workers' compensation (KES2,145mn).
Writing in early 2009, AKI Chairman Nelson C Kuria suggested that the long-term future for the insurance sector was bright, given the low levels of penetration, increasing usage of information and communication technology (ICT), research, product development and focus on new distribution channels. Nevertheless, the challenges are significant. One is that that many Kenyans have little understanding of insurance and/or a low opinion of it. A survey by the AKI in 2003 found that the development of group life, for instance, was hampered by the rigidity of products, the limited scope of coverage, inefficient marketing and legislation. The providers had to deal with a lack of consumer education, the lack of incentives to employers, the domination of the market by brokers and cut-throat price competition. The comments from Kuria in his introduction to AKI's 2008 annual report (which was released in early 2009) indicate that these problems persisted nearly seven years later. However, Kuria was hopeful that the new insurance act would 'accelerate the growth and development of the insurance sector tremendously'. We discuss a number of scenarios as the country moves away from the disputed 2007 election and towards the next elections in 2012. In most scenarios, the insurance industry – which has weathered very difficult conditions in 2008 and 2009 – should continue to thrive. A wholesale breakdown in law and order would be disastrous. As the AKI notes in its 2008 annual report: 'Major man-made disasters caused losses of US$7.8bn in 2008, with large-scale industrial fires, explosions and losses in the energy sector at the top of the list. Man-made catastrophes resulted in 5,600 deaths in 2008.' Most casualties were the result of shipping and boating accidents. However, social unrest and bombings also claimed many lives.
Issues To Watch
Product Development And Pricing
In common with their counterparts in other countries in Africa and the Middle East, the Kenyan insurers
have often produced sub-optimal and undifferentiated products and have competed on price. This needs to change if the profitability of the sector is to grow. In 2008 the industry made a net profit before tax of KES5.05bn, with total assets of around KES146.12bn. During that year 21 companies, or about half the total, made underwriting profits. Collectively, life insurers suffered an underwriting loss of KES1.29bn.
Further Industry Consolidation
Given that commercial challenges are limiting the profitability of many players, we would see any consolidation as a favourable development. We would also be heartened by any move of the foreign groups who are already present in Kenya to increase their investment. We recognise that the small present (and, in world terms, future) size of the market means that Kenya is unlikely to be seen as a country of opportunity by many major multinationals.
Actions Of The IRA
From May 2007, regulatory responsibility for the insurance sector was transferred to the Insurance Regulatory Authority (IRA). In 2008, the IRA published a corporate plan that indicates it has a clear understanding of the problems facing the industry. The IRA is likely to have a role in the development of the new insurance act (as has the AKI). The IRA's actions over the next year or two will provide an indication of the extent to which the industry's problems and challenges are likely to be overcome.


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ReportsandReports comprises an online library of 10,000 reports, in-depth market research studies of over 5000 micro markets, and 25 industry specific websites. Our client list boasts almost all well-known publishers of such reports across the globe. We as a third-party reseller of market research reports employ a number of marketing tools, such as press releases, email-marketing and effective search-engine optimization techniques to drive revenues for our clients. We also provide 24/7 online and offline support service to our customers.

 Contact:

Ms. Sunita
7557 Rambler road,
Suite 727, Dallas, TX 75231
Tel: +1-888-989-8004
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http://reportsandreports.proarticles.co.uk/
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