Jean, I appreciate your response. I would hope that more Kenyans would participate in constructive debates over matters of national importance particularly those that affect them and future generations of Kenyans. It does not take rocket science to figuratively determine why TKL which in the past charged some of the highest tariffs in the world has not made a profit. To date no one has been prosecuted and ultimately convicted for pilfering public funds generated by this very viable corporation. TKL represents a classic example of gross mismanagement, attempts to turn around the corporation have encountered several avoidable obstacles and the status quo has remained. In contrast other publicly owned corporations such as KCB have been turned around and turned into very profitable entities without being sold to alien companies while transitioning to minimal governmental ownership and ensuring maximum equity participation by the Kenyan public. One must wonder if this cheap sale is intended to clean the slate of the years of pilferage and mismanagement while conducting a well though out public relations exercise to show that the current administration is engaged in doing something "good for the country" as opposed to doing something good for foreigners. TKL has turned around a corner and has revamped its infrastructure at great expense. Several exchanges have been upgraded and digitized and so has its domestic digital network. It has retrenched the unnecessary and redundant workers who were a drag on its ability to be profitable (again paid for by the Kenyan taxpayer). Just when TKL is on its home stretch to launching several new and revolutionary services, there is a sudden and urgent need to dispose of it to foreigners or combat it by companies that have been making millions of dollars from Kenyans (read foreign companies). Can these companies explain how they may have acquired 3G frequencies from the regulator without paying a cent when similar frequencies have been sold in other African countries for hundreds of millions of dollars? Can the Exchequer let the Kenyan public know the amount that it received from the companies that are now complaining about TKL's new services in return for this finite 3G public resource that should not be handed out for free ? When were licenses for 3G technology publicly tendered for in Kenya ? Is it a good thing for Kenya that the exchequer be deprived of much needed revenue? If TKL is not viable why are these competitors complaining? Indeed it was patriotism that was the foundation of my comments but not the single one driving factor. The government is by the people for the people. The people here happen to be Kenyan taxpayers and voters. What is unpatriotic or misguided about asking for accountability as to why a corporation that is publicly owned is being sold for pennies on the dollar ? or asking that prosecutions be undertaken for those guilty of the prior pilferage of public funds from the same corporation? There is nothing absolutely misguided about questioning why the government appears to have disregarded national security and the public's interest in attempting to sell TKL. I'm certain that if the decision to sell TKL under the current status quo to foreigners were put to a public referendum, that it would be soundly defeated. Below is an article that sums up the concerns of many Kenyans who have come to know about the illusionary effect of corporations that are Kenyan by name but foreign in all other aspects. Contrary to what many belief, Kenya's wealth is in the hands of foreigners and the attempt to sell TKL is another step in the same direction. The best that could happen would be to follow the KQ model of privitisation which some are advocating and which has ensured that the ordinary Kenyan has an opportunity to benefit, no matter how small from the millions of dollars in profits generated in profits and without forgetting to correct the harm cause by those guilty of the pilferage of public funds and revenue. The government's intentions may be noble but those in Government must not forget that they are in the government for and on behalf of Kenyans who have entrusted them with the public's wealth. Thus Kenyans must come first before foreigners, after all it is their country and their corporation that is at stake. Mike http://www.eastandard.net/archives/sunday/hm_news/news.php?articleid=18216 Kenya's wealth in foreign hands By Kamau Ngotho The bulk of Kenya's wealth is in foreign hands, according to statistics obtained exclusively by The Sunday Standard. If Kenya were a cake to be shared out, Kenyans would only lay claim to 31 per cent of the country's total wealth. The rest would go to foreigners. Agriculture, tourism and banking, which combined bring in the country's largest earnings, are in foreign hands. Last year, tea, tourism, flowers and coffee earned the country Sh140 billion, nearly half of the annual national budget. Of this money, only 31 per cent ended up in the country — as tax and real earnings to the nationals. And shareholding in the richest 20 companies that trade at the Nairobi Stock Exchange is foreign. The skewed distribution of wealth between foreigners and Kenyans puts paid to all efforts since independence to hand control of the country to its citizens. Tea growing, which earned the country Sh43.5 billion last year, is concentrated in the hands of six leading agricultural companies whose shareholding is largely foreign. Up to 78 per cent of earnings from tea went, therefore, to foreigners — leaving the balance for Kenyans. The Big Six in the tea sector are Unilever Tea Kenya, Kakuzi Ltd, Williamson Tea Company, Kapchorua Tea, Limuru Tea Company and Sasini Coffee and Tea. The British-owned Brooke Bond Group holds 43.1 million shares of the total 48.8 million shares issued in Univeler Tea Kenya. The same group owns 54 per cent of the total 3.9 million shares issued in Limuru Tea Company. In Kakuzi Ltd, foreigners have a total shareholding of 68.3 per cent of the total 19.6 million shares issued. They hold the shares through Bordure Ltd and Lintak Investment Ltd, with 35.1 and 33.2 per cent shareholding, respectively. Britain's Williamson family has a controlling majority shareholding in both Williamson Tea and Kapchorua Tea companies. In Williamson Tea, it holds 67.2per cent of the total 8.8 million shares issued through their company, Ngong Tea Holding PLC. In Kapchorua tea, they hold 40 per cent of the 3.9 million shares issued. Sasini Tea and Coffee Ltd is 87.3 per cent owned by business magnate Naushad Merali, a Kenyan. Merali's companies hold his shares in these businesses: Legend Investments Ltd (51.7 per cent), East African Batteries (18.7 per cent), Yana Towers (15.9 per cent) and Swan Estates (1.04 per cent). The reinvigorated tourism sector, which earned Sh42 billion last year, is also foreign-owned. And just as the Sh43.5 billion earnings from tea sector ended up in foreign pockets, so did the Sh42 billion that came from tourism. Tourism earnings went into three directions: Hotels, airlines, and travel/booking agents, in that order. Of Kenya's 290,000-plus tourist hotel bed spaces, foreign hoteliers own 74.3 per cent of it. Tour flights to Kenya are entirely in the hands of foreign airlines. It is all the more foreign-dominated in the traditional tourist peak periods of Easter and Christmas, when there are no scheduled flights to Kenya's tourist hub of Mombasa. During the two seasons, tourists arrive in Mombasa in chartered jets arranged by European tour operators. Foreign companies stationed in European and American capitals also entirely control hotel bookings and transfers. Where internal travel is concerned, foreigners too, dominate by owning 7 of the 11 leading local tour travel firms. At the end of the day, tourism in Kenya remains a foreigners' enclave with indigenous Kenyans left to scratch the surface on petty trades like selling curios and prostitution. After years of lobbying, last year the European Union set aside Sh250 million to economically empower indigenous Kenyans to get a fair share of the lucrative industry. Seven projects were targeted to tilt the balance in a programme called Tourism Diversification and Empowerment Project. But a spokesman at the Nairobi EU office said the money is yet to be released as project proposals submitted are still under evaluation. The only hotel chain listed on the Nairobi Stock Exchange is the TPS Serena. The Aga Khan Fund for Economic Development holds the company's majority shareholding through its company, TPS Holdings Limited. Horticulture, which earned Kenya Sh28.2 billion last year, is the country's third largest foreign exchange earner. It, too, is a foreigners' affair. Indigenous Kenyans mainly come in as casual labourers on the flower farms. Of the 44 certified companies dealing with horticulture products, 26 are foreign-owned. But an even bigger irony is that the leading 10 players in the industry — all foreign-owned — bag 83 per cent of the total income from the sector. Flower farming (floriculture) is the key plank in Kenya's agriculture sector. Seventy six per cent of Kenya's total flower production is concentrated in foreign-owned flowers farms around the Naivasha area. The big three are Homegrown, Sulmac and Oserian. Late last year, Kenya overtook Israel and Columbia as leading exporters of cut flowers. But you would not know that from the world's leading flower auctions in Amsterdam and London. Why? Foreign flower exporters in Kenya have registered their companies abroad — mainly in Amsterdam — and sell flowers they have grown in Kenya under a foreign label. In that case, while flowers from a local company are sold in Amsterdam as flowers from Kenya, Dutch companies growing their flowers in Naivasha sell theirs as flowers from Holland. The consequence of it is that flowers owned by Dutch companies receive preferential treatment at the auction, including exemption from the strict EU- imposed export rules. Flower auctions in Amsterdam and London account for 65 and 25 per cent of Kenya flower sales respectively. Of the approximate 60,000 tonnes of flowers exported from Kenya last year, 37,000 tonnes were sold in Amsterdam and London auctions as flowers from Holland. The statistics can make it look like the entire flower industry in Kenya is one big conspiracy against indigenous people. Foreign air charters, the only ones used in flower transport, charge the highest rates in Nairobi. Freight charges on flowers from Kenya are twice those in the capitals of Kenya's nearest competitors Israel, Columbia and Costa Rica. There are also 40 to 45 per cent higher than in Egypt and South Africa, Kenya's two biggest competitors on the continent. At $400 a day, inspection and storage charges at Jomo Kenyatta International Airport are the highest in the world. So is the freight charge of $1.85-$2.2 per stem. Flowers sold in Kenya's name are inspected stem by stem at the JKIA at the cost of 12 Euro cents a stem. Those grown in Kenya but marketed by overseas- accredited companies are only inspected in bulk. On average, it costs upwards of $1 million to set up a typical flower farm on a half acre spread , which in turn brings in a $50,000 a year. Kenya's fourth leading export earner, coffee, is equally depressing on the ownership scale. The majority of small-scale coffee growers in Kenya sell coffee raw from the farm, earning less than 10 per cent of what the finished end product earns in foreign markets and in a foreign label. Though touted as an agricultural country, the other large-scale agricultural activities in Kenya are also foreign-owned. Rea-Vipingo Plantations, which deals mainly in sisal and dairy farming is 77 per cent owned by the Robinson family of England. They hold the shares through REA Holdings PLC, Unibuckle Holdings Ltd and REA Trading Ltd. Del Monte, world famous for pineapple products, is entirely a French affair and sells its products with the label "Made-in-France". The question of who owns Kenya's wealth sticks out like a sore thumb in the banking sector. The leading two banks with a combined market share of 71.4per cent are Barclays Bank of Kenya and the Standard Chartered. They are foreign-owned. Barclays Bank plc of London owns 68 per cent stake in Barclays Bank of Kenya. Standard Bank Africa, a London outfit, in turn owns 81 per cent shareholding in Standard Chartered Bank. To avoid domination by foreign banks, Nigeria and South Africa enacted laws on percentages of shareholding a foreign bank could own. Foreign ownership is also the same cord that runs through key blue chip companies listed on the Nairobi Stock Exchange. At the East African Breweries, British-owned Guinness plc holds 63.5 per cent of the total equity, leaving Kenyans to scramble for the rest. Guinness shares are held in the names of Diageo Kenya Ltd and Diageo Netherlands B.V. In the Nation Media Group, the Aga Khan holds 28.2 million shares of the 35.6 million shares issued. The Aga Khan's shares are held in the names of the Aga Khan Fund for Economic Development and Amin Nanji Juma. In Kenya Airways, Dutch company, KLM, holds 40.6 per cent equity. In Total Kenya Ltd, French companies Total Outre-mer and Elf Oil Kenya Ltd, own 77 per cent of the total shareholding, while in BAT Kenya Ltd, Molensteegh Investment BV of London, holds 68 per cent of the total shareholding. The question of who owns Kenya's wealth generated a national debate in 1968 when the National Council of Churches of Kenya published a paper entitled: "Who Owns Kenya's Industry?" In the paper, the late Anglican Bishop, the Rev Henry Okullu, regretted that five years into independence, "the compass needle had not moved in the direction of indigenous ownership of Kenya's wealth." Thirty-seven years later, the Rev Okullu would turn in his grave to note that the needle has drifted even further away. On 7/11/07, Jean-Antoine BORD <ja_bord@yahoo.fr > wrote:
Hi,
With due respect, I am not convinced that you asked all the good questions.
To what I have heard so far, Telekom has succeeded neither commercially nor technically in the few past years. A significant part of its infrastructure is considered obsolete if not out of order. I heard many times that the service was quite poor and that one should wait several years to get a land line. Telkom seems to have given up long ago its leadership in Kenya to cell phone operator and successful ISP like Access Kenya, KDN, etc. So, in a certain way, because of possible debts or potential expenses which do not appear in the asset sheet, the valuation of Telkom might be less than its licences.
When you consider the status of Telecom national historical operators in other countries, you should first ask the government why Telekom Kenya has so poorly achieved in the last 5 years.
When a company decide to go for an IPO (particularly when this is a government-owned company), the non-professional investors should have a minimum insurance that the price is fair and the company is sustainable. Here is a second question.
Another issue is the transparency of the process. In many countries, private companies backed by Venture Capital Funds ran in parallel an IPO and a trade sale. For instance, Kelkoo, Skype, etc, have been acquired respectively by Yahoo and eBay instead of going public, because it was more interesting for the existing shareholders. So, an IPO is not always the best way (many companies experienced a crash of their stock a short time after their IPO; investors who could sell some stock where considered as thieves).
Last but not least, the service level in Kenya is still poor and to turn Telkom Kenya into a company leading the progress of this industry (instead of trying to slow down the competition) would probably have a better impact on the economy (and what you call Telkom's shareholders) than the loss inducted by the sale of 40% at a price you consider too low.
Finally, Kenyan Government has demonstrated with the Safaricom deal (and probably many others) that it is able to defend the best interest of all Kenyans, so that one should not consider it is guilty without an equitable judgement.
I could have developed some more arguments, concerning the role paid by Safaricom, Celtel (which are partially owned by foreigners) and many other foreign owned companies which create wealth in Kenya, concerning protectionism and its consequences, etc.
In conclusion, the mail written by Mike seems biased by a misplaced patriotism and many issues have not been considered.
With Kind Regards,
Jean
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*De :* skunkworks-bounces@my.co.ke [mailto: skunkworks-bounces@my.co.ke] *De **la part de *Dorcas Muthoni *Envoyé :* 10 July 2007 20:21 *À : *skunkworks@my.co.ke *Objet :* [SPAM] [Skunkworks] Telkom Kenya is not this cheap sign petition.........
http://www.petitionspot.com/signature/TELKOMKENYA
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