Walu,
Asante for setting the stage for policy discussions on FDI as
relates to ICT policy.
First and foremost, it is important to offer views as to some of
the real causes of local investors failing to meet capital
requirements.
The points on this need not be belaboured. I believe we are making
a scapegoat out of the wrong parties in order to punish other
legitimate local investors through arbitrary changes in investment
policies.
In all the mentioned cases of capital issues, it is quite clear it
was the duty of the regulator to conduct due diligence on the
bidding consortia financial capacities. Had the regulator conducted
this duty, we would not have had bidding entities that were near
bankruptcy or in virtual bankruptcy itself sailing past the pre
qualification stage and somehow beating industry giants with
trillions (not billions) of shillings in turnover complete with
their international experience and expertise in operations
including in Uganda, Tanzania and tens of other countries, and then
failing to pay for licence fees for years as they use the licence
as an "asset" to shop for funding to pay for it.
It is a rather simple matter to conclude that if one has Ksh 100,
in the bank that one cannot afford to write a check for Ksh 10000.
This is why we should stop blaming local investors as a group and
focus on these repeated failures to conduct due diligence. The
insolvency of one such member of a consortium that last bid in the
last major tender points to a complete failure in due diligence.
Secondly inept and poor tendering procedures have led to credible
international investors ditching Kenya. This results in bidding
entities that lack the type of financials any major bank would be
happy to work with. Why would international bidders who have
succeeded across Africa and in our neighbouring countries keep
being disqualified on suspect reasons while relatively unknown and
untested non performers sail through with high marks only to
disappoint? Why should bidders keep spending anywhere from
US$500,000 to US$1m or more bidding when its indisputable that they
are amongst the best in the world only for novices and unknowns in
the industry to score so highly then fail to deliver to Kenyans for
years on end?
Even if the local investors had healthy financials, by virtue of
being co-shareholders with international entities that no bank is
eager to touch, they are as good as sunk when it comes to obtaining
funding for capital intensive projects.
We seem to quickly forget that when investment policy demanded 40%
equity holding by local shareholders, it did not deter Vodafone and
Vivendi from coming to Kenya with 60% stakes. If the opportunities
are there, there will always be takers as long as one is assured of
fair play in the process. Confidence once dented is a difficult
thing to rebuild.
The failure by the regulator to conduct due diligence and failures
in tendering process are scaring away the type of international
operators whose name recognition alone would be sufficient for
local investors to walk into banks and obtain funding for their
capital contributions.
Take the findings for instance from the then named Public
Procurement Complaints Review and Appeals Board in regards to the
first SNO tender.
"Taking into account the critical failure in evaluation by CCK and
also the interference in the tender process and disclosure of
information by CCK, we find that the procurement process has been
seriously flawed and compromised," the board concluded.
or
An article in the Sunday Standard, "How Broke Company Won Tender",
September 18 2005, citing KACC officials investigating the matter
of the 3rd mobile licence tender before investigations were
prematurely and suddenly interrupted by certain interests:
"Initial investigations by the Kenya Anti-Corruption Commission
into the award of the license in 2003 show that two of the major
shareholders in consortium were had financial difficulties at the
time of the award.
...
With the other partners not being financially stable, the
consortium fell short of the minimum financial requirements by well
over $80 million."
Why is it that KACC is able to see what the regulator apparently
did not see or realise?
For these and other reasons we cannot continue to solely blame the
vast majority of local investors. We must place blame failure on
the lack of financial due diligence and failed tendering procedures
that instead attract the types of international investors that
banks would not feel comfortable dealing with due to their lack of
a lengthy track record and weak financials that don't suit capital
intensive projects.
So let us look at the root causes, not the symptoms and tackle
those root causes instead, majority of which lie within our
institutions to resolve the problems. Foreigners while welcome to
invest in Kenya should not be thought of as the number one solution
when the problems that cause local investors problems lie within
institutions and policies. That said views on FDI per ICT policies
will be forthcoming separately.
Peterson
On Thu, 16 Oct 2008 12:37:09 +0000 John Walubengo <jwalu@yahoo.com>
wrote:
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 policies shall
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 these
lessons do not include:
1. How to give away your national treasures - like
bandwidth - to foreign
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 heading there
with its eyes opened.
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 pressure. Top
to bottom,
4. That the local mwananchi can invest in their
own country and manage its
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 that
basket.
Joe
On Wed, Oct 15, 2008 at 4:55 PM,
<eadera@idrc.or.ke> wrote:
Anyone has taken the time to thoroughly study
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 this
country. And let me tell you that
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 the
billions.
>
>Dada Lizette, we know that there are
Kenyans who are white, black
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 point
but use it for the best
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 please
don't generalise who is kenyan
and who is not!!! Kencall directors and
owners are Kenyan and not
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 the past
forced local partnership have been
subjected to threats and
intimidation by the local partners when
fare share, (given to them mind you). Thus
>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
be developed in an
like Airline, Military and
the man is feeding her.
oligarchs - all members of
think that as a
the secret behind
the funds. I do agree
them the opportunity to setup
that foreign investors with
they wanted more than their
the weariness o
people.
>
>
>
>
>On 10/7/08, John Maina
<j.maina@ymail.com> wrote:
http://www.wananchiforums.com/showthread.php?p=3150#poest3150
>
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>
>This message was sent to:
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>Unsubscribe or change your options at
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>
>
>
>
>--
>Lizette Kraft
>P.O. Box 18488, 00500
>Nairobi, Kenya
>Cell: 0722-800362
>
>
>
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