 FINANCE ICEA: THE POWER OF CHARM |
In fact, First Chartered Securities Group owes its creation to ICEA (Insurance Company of East Africa), the flag bearer of the Group. "The acquisition of a wide range of assets caused the creation of a separate holding company into which to hive off those business entities essentially falling outside ICEA's core activity" explains its overtly friendly Managing Director, Mr. Joseph Ndung'u. 100% owned by First Chartered Securities, ICEA has managed to position itself as the single largest provider of group life and pensions products and life insurance company in Kenya. Today its asset base exceeds Ksh 9 billion (US$ 118.4). ICEA's activities, however, do not stop at just providing insurance. ICEA owns one of the country's largest property portfolios, comprising both office blocks and residential complexes, such as the fancy residential area of Riverside Park in Nairobi. ICEA has not restricted its operations to Kenya, they see the East African region as their home. They are already concentrating their efforts in Uganda and will soon venture further afield in the regional markets. Mr. Ndung'u is one of the most positive businessmen our team encountered. He just sees tremendous business possibilities everywhere. According to him "Kenya still has enormous potential waiting to be tapped. In the insurance sector, for instance, it is noteworthy that barely 2% of Kenya's population (30 million people) has taken out life insurance policies, and the situation is no different in the rest of the East African Region". Like their holding company they intend to put their resources and local know-how at the disposal of international investors seeking to forge partnerships with local business enterprises. Who knows, out of this partnerships could emerge Africa's future multinationals.
| THE BANKING SYSTEM UNDERGOES HARD TIMES |
The banking system has not fended that well though, especially smaller local institutions. Commercial banks, which previously enjoyed the lucrative business of TB trading and inflated interest rates, have suffered when these were reduced. This, combined with bad debts by borrowers unable to pay back has hampered their performance. Five of the smaller banks have been close to total collapse, only saved by the Central Bank of Kenya that has swiftly came to their rescue setting strict banking controls. | The largest banks have also suffered from bad debtors, although the strongest ones have all declared benefits, such as Standard Chartered or Barclays Bank, the single largest bank in the country (100 branches), established in Kenya for more than 80 years, and considered to be one of the blue chips in the Nairobi Stock Exchange (NSE).
Mr. Peter Harris, Regional Head East Africa for Citibank explains that the strategy that has allowed them to grow steadily since they got started in 1974 is to be very selective about their clientele, having carved a niche in corporate banking. Some of their customers include the major American multinationals established in Kenya (oil, manufacturing, airlines), international donors and the IMF. They have, for instance an office in the UN complex in Nairobi. Citibank´s Nairobi's state of the art new offices - with doors so impressive that look like the gates of paradise - are the headquarters to 15 other countries in Africa. Citibank merged last year with Solomon Brothers at a global scale, so now they can offer their expertise in the privatization process by launching companies into the Stock Exchange. This year, for instance, they have reactivated the paper market with Unilever, Shell and General Motors. In fact Mr. Harris specifies that they were the bankers and lead managers of Kenya Airways, successfully completing the privatization process of this airline by launching in 1996 the biggest flotation of any company in the NSE ever.
Other banks have not enjoyed such luck. One of the most dramatic cases is that of the Cooperative Bank of Kenya, the third largest bank in Kenya in terms of capitalization. They were about to get listed at the Stock Exchange when the bombing of the American Embassy took place in August 1998. Being next door to the Embassy, their headquarters received the full impact of the blast. 11 of their employees were killed and their main building destroyed until this day. Auditors considerably reduced their assets thus having to forego their launching into the NSE. Mr. Murithi, Co-op Bank Managing Director, proudly claims that they were able to retrieve all their data and were fully operational only 6 days after the terrorist attack, but he complains they have been put into a tight economical situation, despite their Ksh 1.1 bill (US$ 14.6 mill) share capital and Ksh 1.6 bill (US$ 21.3 mill) reserves |
