Walu, That was actually PS Ndemo's proposal in 2007 and it appears to have been part of the proposed ICT bill. It was: What we are saying is that a foreign investor needs time to (get to) know whom he can work with," Ndemo says. "In three years he can do a private placement or in five years do an IPO (initial public offering) or introduce employee option plans, but they must give 30 per cent to locals." It is good that PS Ndemo is sharing details about the foreign investors and what they actually said, contrary to what was reported about the companies not wanting to partner with Kenyans. Lost in this debate is the wide scope of the ICT sector. Some businesses such as BPOs don't tend to be capital intensive projects requiring upwards of greater than US$5 million. BPOs bring in inflows and foreign exchange earnings into the country. The same case with manufacturing through exports even though those tend to be capital intensive. I will return to these two points shortly in regards to the application of FDI policies. Lets visit some of the points raised by PS Ndemo. I believe we are getting closer to tackling some of the real causes of these problems or obstacles. 1. The case where a foreign investor is tied to non-performing locals in Telecom operator licensing more so those conducted through public procurement procedures: The problem can be easily solved by CCK amending its tender specific rules or the law as applicable to: a) Keep the current provision of not changing the nature of the consortium prior to the announcement of the tender outcome. This is to prevent manipulation of the evaluation process by the lead applicant or technical operator who may defect to other consortia in the middle of evaluations after private or political lobbying. b) Change the current provision addressing the post tender results to allow the removal of any equity participant without consequence to the licence when the regulator has satisfied itself that there is a valid case of a failure to contribute capital to meet licence fee requirements. The poison pill however should be that the removal of the technical partner should certainly be fatal to the ability of the consortium to roll out. The lead applicant if its not the technical operator should only be replaced under extreme circumstances. These provisions however should not be abused to engage in unrelated shareholder battles other than those involving the ability to contribute to licence fee payments. c) Allow a consortium to take on additional investors after the tender results and before roll out of the licence following approval by the regulator in cases where the regulator is satisfied that capital constraints are a hindrance to paying for the licence or roll out. d) If all else fails, allow Government intervention as outlined by the PS in early 2007 (can be improved on) except where the technical partner/foreign investor is the cause of the failure through application by the investor to the Government. Other options include the Government taking an equity stake in trust to prevent the collapse of the investment where all else has failed and the investor is short on capital to cover the local component. This would prevent the failures of Reliance and Vtel as the PS mentions. 2. Reform and strengthen the regulator as an institution with a very strong emphasis on financial due diligence during public procurement tenders. Remove any and all loopholes in existing procedures to restore and enhance bidder confidence in the process. In this and other regards the Global Communication and Information Technology Policy Division of the World Bank could be approached to play a key advisory role based on its expertise: http://www.worldbank.org/ict/policy Noted above were references to BPO's and manufacturers. The growth of which has somewhat stagnated if not yet to take off (manufacturing). Given the ICT board's recent initiatives regarding BPOs, shouldn't we give local operators a chance to harness these new opportunities? The use of blanket policy without specificity should be avoided if possible. Take for instance the following varying characteristics of a telecom operator, a BPO and a manufacturing facility: a) The BPO and Manufacturer export goods and services while a Telecom operator more often than not will serve a domestic market solely. b) Telecom projects build significant infrastructure as do Manufacturers. c) All three without exception create local jobs. d) Out of the 3, BPOs and Manufacturing are budding if not yet to bud industries in Kenya. e) Manufacturers and BPOs can primarily be located in EPZs. The policies PS Ndemo referred to were announced in conjunction with the intention to licence a 5th mobile operator within the next 18 months. One might as well have assumed the policy adjustments were being made for a 100% foreign owned operator to enter the mobile telephony market. In which case one would be justified as was the case, to ask who the foreigners were and if they indeed demanded these adjustments to suit their business ambitions including the pre-planning of an upcoming tender. Now that more has been revealed, it is apparent that some exemptions from policy are needed rather than blanket rules and regulations. Below are some additional suggestions: a) Temporarily lift the local component requirement for the first X number of manufacturers to set up shop in the country. However provide additional incentives for including local components both in shareholding and the manufacturing process. Local equity participants need not provide cash as they could provide capital inputs such as land and physical facilities. The government could give free land as an incentive if the manufacturing facility was set up in areas targetted for development for instance. b) Evaluate BPO requests for exemption on a case by case basis after demonstration that the local equity component could not be filled (See PS Ndemo's 2007 proposal as a starting point). A blanket, inflexible policy could have the potential effects of foreign BPO's fleeing from rising costs elsewhere to potentially upstage the efforts of indigenous BPOs as well as the ICT board. This should not be misread to mean that competition is unwelcome. c) Make no changes as pertains to Telco's except as suggested above for tendering procedures. Adopt something similar to PS Ndemo's original suggestion. d) Seek the World Bank's advice as suggested above. This does not mean succumbing to arm twisting rather it means drawing upon the World Bank's experience and expertise in an area where it has advised several Governments facing similar matters: http://www.worldbank.org/ict/policy All in all there should be some key incentives granted for investors who voluntarily include locals in entity equity participation. Peterson On Fri, 17 Oct 2008 10:59:27 +0000 John Walubengo <jwalu@yahoo.com> wrote:
Plse lets hear more opinions on this issue. I heard one opinion that in the vent local investors are unable to raise funding, we could allow the foreing investor get in at 100% ownership on condition that they offload 20% to local investors within 3- 5years. Is this workable?
Yet another opinion was that local investors do have the funds - its just NOT structured i.e. well consolidated and cordinated. I think this may also be true if the recent Safaricom IPO is anything to go by. So it looks like we do have the funds for ICT investments while at the same time we dont! Where is the catch, bottleneck? How could this be resolved?
walu. --- On Fri, 10/17/08, bitange@jambo.co.ke <bitange@jambo.co.ke> wrote:
From: bitange@jambo.co.ke <bitange@jambo.co.ke> Subject: What should the Investment Policy Be? To: jwalu@yahoo.com Cc: bitange@jambo.co.ke, "KICTAnet ICT Policy Discussions" <kictanet@lists.kictanet.or.ke> Date: Friday, October 17, 2008, 11:22 AM Dear Listers, A number of you have written to me off-list seeking to know the organizations that have sought excemption from the 20% local equity partcipation.
These are four of the World's largets call centers and two ICT equipment manufacturers. They have said very clearly that they do not want to go through what some of the investors in telecoms sector went through or are going through. By this they mean local "Investors" who fail to raise their part of the bargain. We failed thrice to get the SNO simply because our local investors could not live up to their promises (Vtel, Reliance etc). This is an annormally in the current policy that does not allow the investor to seek for another local investor in the event of a disagreement in the first marriage (Do not read Econet since law is never applied retrospectively).
Any progressive policy would give a chance to other people instead of forcing investors to stay in a marriage that does not bear fruit. You recall in past meeting we have called for such investments to seek for partnership at the stock exchange. This would mean then that the current policy is changed to allow that in the event there is a disagreement, the foreign investor can seek for a nother partner or better go to the stock market.
My responsibility among others is to ensure that we achieve vision 2030 objectives as presicribed in the vision. In order to achieve the targets, especially of getting at least 50,000 youth into BPO sector in the next three years, we must get these bigies. This is what Ireland, India and Philipines did.
Regards
Ndemo.
Hey Folks,
I have lurked in the background for a while and like Wainaina I got a bit lost in the exchanges. But I think one fundamental thread in all this - despite the muddy exchanges - is the question of how do want to engage with Foreign Investors? JM and others may have a point here - despite their strong language.
So maybe to bring benefit out of all these, we could indulge for a day or two on the Policy we want as far as Foreign Direct Investments (FDI) into our ICT industry are concerned.
Correct me if am wrong but I believe the Government position/policy on this has been that the Foreign investor MUST incorporate a local investor at minimum ratio 20%(local) to 80%(foreign) ownership/equity. I think the members who feel that this should be changed have cases/examples where the local equity/investor failed to come up with their 20% capital and so the opportunity for investment disappears. On the other hand, other members feel that local investors are abundantly rich and can come up with even over 50% of any capital/equity required to invest in the industry.
I honestly dont know which side is right and which one is wrong - but what I do know is that there exists cases where the local investors have failed to meet their capital requirements - hence the need to review or interrogate whether this policy is detrimental or indeed beneficial to our industry.
Plse lets have objective comments that are devoid of personal attacks and we shall make progress. Otherwise we begin to sound like a broken record.
walu.
--- On Thu, 10/16/08, gachuhi anthony <gachuhi.anthony@gmail.com> wrote:
From: gachuhi anthony <gachuhi.anthony@gmail.com> Subject: Re: [kictanet] PS Ndemo, ECONET Scandal aand Vested Interests To: jwalu@yahoo.com Cc: "KICTAnet ICT Policy Discussions" <kictanet@lists.kictanet.or.ke> Date: Thursday, October 16, 2008, 8:16 AM Moderator Is there a way off having an online poll to know where we stand maybe from there we may be able to know who is for or against the policies being discussed. Then we can give reasons as I don't think this a list to decide who is more kenyan than the other its about what will affect us all Tony
Dear all,
What is the desired outcome of this very energised
On 10/16/08, Wainaina Mungai <wainaina@madeinkenya.org> wrote: thread? (Select one)
A: That the PS (I&C) announce that
open, transparent and consultative manner. He also must organise a forum to kickstart non-emotive talks by mid-November.
B: That PS Ndemo resigns and is replaced with a person of your choice.
C: That the Econet licence, Kencall licence and related MoUs, contracts signed by PS (I&C) be cancelled.
D: That all stakeholders Govt., KICTANET, KIF, CA, etc organise an "ICT Investment" policy forum to be held in Nairobi around mid- November 2008.
I hope this shall help us focus on defining and achieving a common goal so that we desist from personal attacks on integrity, racial profiling and so on...
Good day, Wainaina
On 10/16/08, Joseph Manthi <jmanthi@gmail.com> wrote:
Edith,There are some useful lessons - but
1. How to give away your national
entities just because they say they can not do any business with local entrepreneurs. In fact I know this for a fact, you would never get a license to operate in UAE if this was your argument. Further to this lesson I would like to point to these additional countries that would laugh you out of town if you made that argument - US (some businesses
Defense, Telecommunications (not ISP), Radio & TV), India, Singapore, Malaysia, Taiwan, Hong Kong, China, the whole of Middle East, South Africa, Japan (especially Japan)
2. How not be conned. Kenya seems to
When a man approaches a woman, it would be a very stupid woman, who knowing what a man is capable of, to accept the BS that
And if she does then she deserves what she gets. Kenya will get what it deserves and very soon. A good example is Russia and its
the Forbes Richest.
3. Great leadership is necessary to grow a country. A leadership with intestinal fortitude to say no under
4. That the local mwananchi can invest in
growth
5. That a great nation looks upon its diaspora to grow it - a la Israel and India
6. That a great nation does not wait to be raped twice - We seem to be following a process that will guarantee our raping despite how Kenyan some members of this committee think they are. Its just a matter of time before they pick up their bags and leave. I really do not
national planner I should be putting my eggs in
Joe
On Wed, Oct 15, 2008 at 4:55 PM,
<eadera@idrc.or.ke> wrote:
> Anyone has taken the time to
> Dubai's tremendous growth? (U.A.E in general). There are some useful > lessons! > > > > > >---- Original Message ---- > >From: j.maina@ymail.com > >To: eadera@idrc.or.ke > >Subject: Re: [kictanet] Fwd: PS Ndemo, ECONET Scandal aand Vested > >Interests > >Date: Wed, 15 Oct 2008 09:03:50 -0700 (PDT) > > > >>Lizette > >> > >>I think that you have racially inclined your mind. > >> > >>When did KENCALL directors become Kenyans? After getting good > >friends to bribe their way to
> >the money the so called investors are using are Kenyan money not > >money from foreign banks. > >> > >>They have come and borrowed from Kenyan banks. How much does the > >most profitable telecomms companies leave in this country, very small > >amount. We have Telecomms companies which are on their marks. They > >have very inferior systems and dont actually deliver in service but > >make billions and run away with
> >> > >>Dada Lizette, we know that
> >coloured and all but know that I am a mixed race Kenyan and really > >sad when our brotehrs have to suffer because of bad policies from > >people like PS > >> > >>JM > >> > >> > >> > >>----- Original Message ---- > >>From: Lizette Kraft <lfkraft@gmail.com> > >>To: j.maina@ymail.com > >>Cc: KICTAnet ICT Policy Discussions <kictanet@lists.kictanet.or.ke> > >>Sent: Tuesday, October 14, 2008 1:52:07 PM > >>Subject: [kictanet] Fwd: PS Ndemo, ECONET Scandal aand Vested > >Interests > >> > >> > >>Just my two pennies worth here. > >> > >>Kenya is not an Island that it can survive on its own even through > >local investment. Most times we dont have
> >though about the Government and banks not supporting local investors > >with loans etc. They must start giving
> >local expertise and turn them in money making ventures, if only they > >wouldn't fleece their own companies. Even America, the giant needs > >investors!!! You all have a valid
> >interests of Kenya and its people first and foremost. Not just self > >interest for the few. And by the way Kenyans come in all shapes, > >sizes, COLOURS, and creed. So
> >and who is not!!! Kencall
> >outsiders if I understand correctly. When we are taxed whether > >individually or coorporately, the money is used for Kenya and Kenyans > >and not for outsiders who invested! Forcing local partnership in > >foreign owned companies has > >> its negative and positive effects. > >>This needs to be look at more seriously to make it a win-win > >situation. It has been known in
> >forced local partnership have been subjected to threats and > >intimidation by the local
> >fare share, (given to them mind you). Thus
policies shall be developed in an these lessons do not include: treasures - like bandwidth - to foreign like Airline, Military and heading there with its eyes opened. the man is feeding her. oligarchs - all members of pressure. Top to bottom, their own country and manage its think that as a that basket. thoroughly study the secret behind this country. And let me tell you that the billions. there are Kenyans who are white, black the funds. I do agree them the opportunity to setup point but use it for the best please don't generalise who is kenyan directors and owners are Kenyan and not the past that foreign investors with partners when they wanted more than their the weariness o
> >>of being forced now. This does not attract any investor. But the > >foreigners should not fleece the country either! > >> > >>Let us have some constructive critisism without being racially > >inclined. Fight to make things right no matter what but without > >pinpointing nationalities or
colours of >> people. >> >>> >> >> >>> >> >> >>> >> >> >>> >> >> >>> >>On 10/7/08, John Maina >> <j.maina@ymail.com> wrote: >> >>> >> >>http://www.wananchiforums.com/showthread.php?p=3150#poest3150 >> >>> >> >> >>> >> >>_______________________________________________ >> >>> >>kictanet mailing list >> >>> >>kictanet@lists.kictanet.or.ke >> >>> >> >>http://lists.kictanet.or.ke/mailman/listinfo/kictanet >> >>> >> >> >>> >>This message was sent to: >> lfkraft@gmail.com >> >>> >>Unsubscribe or change your options at >> >>> >>
http://lists.kictanet.or.ke/mailman/options/kictanet/lfkraft%40gma il.
> >com > >> > >> > >> > >> > >>-- > >>Lizette Kraft > >>P.O. Box 18488, 00500 > >>Nairobi, Kenya > >>Cell: 0722-800362 > >> > >> > >> > > > >
> kictanet mailing list > kictanet@lists.kictanet.or.ke >
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