The Mwango Capital Podcast

In this episode recorded on 22.01.2024, we are joined by Churchill Ogutu - Economist, IC Group and Julians Amboko - Business Journalist, Nation Media Group for a discussion on the latest IMF report on Kenya.

We also cover the Medium-Term Revenue Strategy (MTRS), broadening the tax base, currency depreciation, and Eurobonds.

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Show Notes

00:00:00 Introduction 

00:02:26 Why Does Kenya Need the IMF?

00:05:09 Takeaways From IMF’s Sixth Review Report

00:12:15 Medium-Term Revenue Strategy and the Finance Act 2024

00:17:24 Augmentation of Existing IMF Programs

00:23:47 Extended Credit Facility (ECF) Extended Fund Facility (EFF), And Resilience And Sustainability Facility (RSF

00:26:03 Broadening The Tax Base and Fiscal Consolidation

00:36:52 Treasury Single Account, Appropriation Bill, and Appropriation Act

00:41:16 Currency Depreciation and Special Drawing Rights 

00:53:32 Consumption Tax, Refinancing, and Eurobonds

01:02:38 Closing Thoughts

In this episode recorded on 19.12.2023, we are joined by the Kenya Power team of Rosemary Oduor - GM, Commercial Services & Sales and Raphael Ndolo - Ag. GM, Network Management to better understand Kenya's electricity value chain.

We also cover electricity generation, power demand, blackouts, IPPs, compensation for damage, and carbon trading.

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Show Notes

00:00:00  Introduction

00:07:06 The Electricity Value Chain

00:09:38 Electricity Generation, Power Demand, and Reserve Capacity

00:22:20 Blackouts and Grid Connections

00:28:34 IPPs

00:36:50 Independent Businesses Selling The Excess Power

00:42:56 Power Transmission

00:46:48 Compensation for Damage by Power Surges

00:49:09 Dispatch Merit Order

00:53:26 SLAs

00:56:58 N-1 Contingency, Power Storage, and Load Shedding

01:08:18 Optimal Power, Energy Insecurity, and Carbon Trading

01:19:27 Closing Thoughts

In this episode recorded on 20.12.2023, we are joined by Dr. Priscilla Njako - Manager - Competition Authority of Kenya (CAK), Willy Kimani - Director, RETRAK Kenya, and Ishmail Bett - CEO, Association of Kenya Suppliers for an in-depth discussion on buyer power and its potential abuse.

We also cover the role of the Competition Authority of Kenya, the recent KES 1.1B penalty meted out to Carrefour, the sanctity of contracts, and retail trade dispute settlement.

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Show Notes

00:00:00 Introduction

00:02:17 CAK’s Role and Buyer Power

00:08:32 Retail Space in Kenya 

00:14:52 Association of Kenya Suppliers

00:17:02 Determination of Buyer Power and its Abuse

00:27:12 Sanctity of Contracts 

00:33:48 Dispute Settlement, the Competition Tribunal, and the Carrefour Case

00:54:02 Settlements with CAK and the Carrefour Penalty

01:10:37 Beyond The Penalty

01:18:09 Options Available to an Offending Party

In this episode recorded on 30.11.2023, we are joined by Ronak Gadhia, Managing Director, Banks at EFG Hermes Kenya, as we take a deep dive into the Kenyan Banks' Q3 2023 results.

We also cover the Kenyan debt situation, subsidiary performance, dividend expectations, and the creation of bad banks to deal with non-performing loans.

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Show Notes

00:00:00 Introduction 

00:01:00 Banks’ Q3 2023 Performance

00:06:49 Kenyan Debt

00:10:33 Loan Books, NPLs, and Provisions

00:21:47 Subsidiaries, Acquisitions, and OpEx

00:29:40 Non-Funded Income

00:37:22 Quality of Earnings for Stanbic And StanChart

00:43:42 Dividend Expectations

00:47:07 Good Bank, Bad Bank

00:50:50 NPL Management and Tier 1 Capital

00:51:52 Q4 and Full-Year Outlook

00:58:47 Closing Thoughts

In this episode recorded on 22.11.2023 and hosted by Joe Mwaniki, we are joined by Ernest Muriu - Audit Partner, Ernest & Martin Associates and Hakamba Wangwe - Chief Manager eTIMS, KRA for a conversation on the implications of the mandatory eTIMS registration.

We also cover turnover tax registration, exemptions from electronic tax invoices, implications of failing to onboard on eTIMS, and capacity building for KRA staff.

Below are some nuggets from the podcast:

“If you are working in an environment where you have business-to-business transactions, and if you do not comply, then you become another person's inconvenience. Probably that other person will feel uncomfortable doing business with you because it means then if they do business with you, that's an expenditure or transaction that they cannot be able to account for in their income tax returns.”

“We have provisions for determining when the tax point is, especially for VAT purposes. The tax point is when you either issue an invoice, receive payment, whether fully or partially, whether you've completed the service, or whether you've received a certificate of completion, if you're thinking of maybe a construction service, then whichever comes earlier, that's when you're supposed to declare that invoice. If it takes long to be paid, the law says, once you complete the service, then that's when the tax point applies. And that's when you need to declare it.

“If you are making sales amounting to 5 million in a year, then you are required to register for VAT purposes…For TOT, the turnover tax, your sales should be between Kshs 1 Million and Kshs 25 Million. The rate is 3 percent for turnover tax. It's supposed to be paid based on the total turnover for the previous month multiplied by 3%. That's what you declare in your turnover tax return by the 20th of the next month.”

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Show Notes

00:00:00 Introduction

00:03:19 What is eTtims?

00:11:12 eTIMS Solutions for Various Taxpayers

00:18:33 Implications of Failing to Onboard on eTIMS

00:25:52 Generating an Electronic Tax Invoice

00:31:43 Other eTIMS Functionalities and Non-VAT Invoices

00:40:13 VAT and Turnover Tax Registration

00:46:52 Exemptions

00:58:17 Compliance Rates and Lessons From TIMS

01:03:02 Trade Facilitation and Capacity Building

01:11:43 Tax Compliance and Small Businesses

01:15:30 Closing Thoughts

In this episode recorded on 10.08.2023, we are joined by Tim Staermose - Founder, African Lions Fund as we explore investing in equities in Tanzania. We discuss the structure of the Tanzanian market, finding investors, moving funds across jurisdictions, and the Africa Lions Fund’s performance.

Below are some nuggets from the podcast:

“The beauty of funds management is that it is very scalable. Those fixed costs don't rise commensurately with the assets under management, they might rise a little bit, but certainly not at the same pace. You might be able to grow your fund 10 or 20-fold before your fixed costs double in many cases.”

“I'm a value investor but what I'm looking for primarily is, good, solid businesses run by honest and competent people. That's number one. And then I'm trying to buy them also at valuations low enough that I think that there's a potential for the valuations to double. So those are the things that attract me, high returns on equity, and competent and honest management.”

“In terms of which markets to be bullish on and which to avoid, there's two factors at work there. There's the fundamentals, and then there's also the valuation. So at what point in the cycle is the economy and the credit cycle and so on? That's important. I like to go to places that are not near the top of the cycle. Where there are some problems, the economy is either bottoming out or turning. But then also the valuations. It's no use going in somewhere where valuations are still very high. So you need both things working together.”

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Show Notes

00:00:00 Introduction

00:03:23 Investing In Tanzania and Investment Philosophy

00:13:49 Setting Up A Fund In Tax-Neutral Jurisdictions

00:18:24 Structure and Risks in the Tanzanian Market 

00:31:08 Investment Criteria

00:35:02 AUM and Costs of Running Sustainable Equity Fund

00:42:41 Activism vs Exiting a Position

00:49:02 Succession Planning, Lock-in Periods, and Allocation 

00:53:08 Searching for Data In Africa

00:56:20 Dividend Payments and the Depreciating Shilling

01:04:20 Moving Funds Across Jurisdictions

01:07:25 Macro Perspectives and Undervalued Stocks in the NSE

01:10:48 Tanzanian Banks

01:16:55 Africa Lions Fund’s Performance

01:19:01 Closing Thoughts And Reflections

In this episode recorded on 17.08.2023, we are joined by James Muraguri - CEO, Institute of Public Finance as we seek to understand Kenya's budget-making process and how to participate in it.

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Show Notes

00:00:00 Introduction

00:02:14 Institute of Public Finance 

00:05:45 Overview of the Budget Process

00:23:15 Is The Budget Process Short-Term Oriented?

00:31:42 Tools to Help Citizens Understand And Participate in the Process

00:36:33  Tokenistic Approach to Public Participation 

00:39: 41 Macro Outlook

00:42:51 Supplementary Budget

0:44:00 Need for Accountability at the County Level

In this episode recorded on 28.11.2023, our guest host, Mark Masai, is joined by Florence Nyokabi - MD Human Resources, Stanchart West Africa and Oscar Nganga - Enterprise Sales Manager, SeamlessHR (East Africa) in a conversation on how you can attract the best talent.

We also cover the value of seeking talent globally, automation in recruitment, legal and regulatory challenges in international recruitment, and emerging trends in cross-border recruitment.

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Show Notes

00:00:00 Introduction

00:02:09 Value of Seeking Talent Globally

00:04:39 How SeamlessHR Eases Global Talent Recruitment

00:08:00 Securing Employment In Global Organizations

00:11:07 Automation and the Human Element In Recruitment

00:14:46 Legal Considerations In International Recruitment

00:22:40 Bias In AI

00:26:24 Navigating The Relocation Process

00:34:30 Key Metrics in Data-Driven Hiring Strategies

00:36:26 Dos and Don’ts as a Global Talent or Recruiter

00:42:01 Emerging Trends In Cross-Border Recruitment

In this episode recorded on 09.11.2023, our guest host, Ramah Nyang, is joined by Wangari Muikia - MD, Expertise Global and Johnson Nderi - Corporate Finance and Advisory Manager, ABC Capital to talk about the state of the Kenyan Economy.

We also discuss planning for 2024, public debt, buying back the 2024 Eurobond and the huge debt service.

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Show Notes

00:00:00 Introduction

00:01:57 Macroeconomic Assumptions in Planning for 2024

00:08:43 Predictable Tax Framework

00:13:08 Public Debt

00:23:11 Eurobond Repayment Extension

00:26:13 2024 Perspective

00:29:15 2024 Eurobond Buyback

00:45:11 Huge Debt Service

00:54:40 Making Equities More Attractive

In this episode recorded on 13.09.2023, we host Eric Musau - Executive Director, Research at Standard Investment Bank and Ronak Gadhia - Managing Director at EFG Hermes Kenya to dissect Kenyan banks' H1 2023 earnings.

We also cover the banks’ non-performing loans, the forex market, and the future outlook.

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Show Notes

00:00:00 Introduction

00:01:56 High-Level Thoughts on the Results

00:06:20 Loan Books

00:10:18 NPLS

00:24:06 International vs Local Banks

00:29:57 FX Market and Gov’t Securities

00:34:25 Capital Allocation

00:39:43 Eurobond, Credit Rating, and Outlook