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Macro Thoughts

Home Thoughts

There are so many things I love about Mombasa. The Sea Breeze which
changes flavour just before the rains are set to come. I sometimes
feel, however, that the Mombasa I knew was from a different Era.

Reflecting on his legacy in a Fox News interview aired on Sunday,
Obama said his “worst mistake” was “probably failing to plan for the
day after what I think was the right thing to do in intervening in
Libya”.

Obama has conceded that the intervention “didn’t work”.

Conclusions

I like the fact that @Potus is big enough to accept his mistakes.

And yes Libya was a Failure and No-One considered the day after.

I am left thinking, this dead Gaddafi business is one powerful
message. And today Marshall McLuhan’s prediction in The Gutenberg
Galaxy (1962) that ‘The new electronic interdependence recreates the
world in the image of a global village’ has come to pass. The image of
a bloodied Gaddafi, then of a dead Gaddafi in a meat locker have
flashed around the world via the mobile, YouTube and Twitter.

Who is in charge of the messaging? Through the fog of real time and
raw footage, I note a very powerful message. The essence of that
message being;

‘Don’t Fxxk with us! Because you will end up dead and a trophy
souvenir in a fridge.’

“It is a gut-wrenching display, it tugs at all of your sensibilities
as a human being, it reminds everybody of the extraordinary complexity
of choices in war and what war does to people, communities, to
countries, to the world," Kerry said later in the day.

The US Air Force sent B-52 bombers to the Persian Gulf Saturday and
plans to use them for bombing raids on targets in Iraq and Syria,
according to the Pentagon and the US Central Command, which oversees
US military operations in the Middle East. An undisclosed number of
bombers will be stationed at Al Udeid air base in Qatar.

This marks the first deployment of B-52s in the Middle East since the
1991 Persian Gulf War

“Those who foolishly sought power by riding the back of the tiger
ended up inside” ― John F. Kennedy

Euro 1.1409
Dollar Index 94.00
Japan Yen 108.20
Swiss Franc 0.9541
Pound 1.4245
Aussie 0.7638
India Rupee 66.445
South Korea Won 1143.24
Brazil Real 3.4914
Egypt Pound 8.8797
South Africa Rand 14.7160

Dollar Index 3 Month Chart INO 93.987 [93.00 is the Key Level of Support]
http://quotes.ino.com/charting/index.html?s=NYBOT_DX&v=d3&t=c&a=50&w=1

Euro versus the Dollar 3 Month Chart 1.1409 [1.1450 is a Key Level
we hurdle that and we could run up a few big figures]
http://quotes.ino.com/charting/index.html?s=FOREX_EURUSD&v=d3&t=c&a=50&w=1

Gold 3 month INO 1254.85 [back above the 1250 Pivot]
http://quotes.ino.com/charting/index.html?s=FOREX_XAUUSDO&v=d3&t=c&a=50&w=1

Crude Oil 6 Month Chart INO 40.24 [will crumble back to 30.00 again]
http://quotes.ino.com/charting/index.html?s=NYMEX_CL.K16.E&v=d3&t=c&a=50&w=1

Emerging Markets

Frontier Markets

Economic activity in Sub-Saharan Africa slowed in 2015, with GDP
growth averaging 3.0 percent, down from 4.5 percent in 2014. This
means that the pace of expansion decelerated to the lows last seen in
2009.

The 2016 growth forecast remains subdued at 3.3 percent, way below the
robust 6.8 percent growth in GDP that the region sustained in the
2003-2008 period.

There were some bright spots where growth continued to be robust such
as in Côte d’Ivoire, which saw a favorable policy environment and
rising investment, as well as oil importers such as Kenya, Rwanda, and
Tanzania.

”As countries adjust to a more challenging global environment,
stronger efforts to increase domestic resource mobilization will be
needed. With the trend of falling commodity prices, particularly oil
and gas, it is time to accelerate all reforms that will unleash the
growth potential of Africa and provide affordable electricity for the
African people,” says Makhtar Diop, World Bank Vice President for
Africa.

Several countries are expected to see moderate growth. Among frontier
markets, growth is expected to edge up in Ghana, driven by improving
investor sentiment, the launch of new oilfields, and the easing of the
electricity crisis. In Kenya, growth is expected to remain robust,
supported by private consumption and public infrastructure investment.

Housing and transport are particularly costly in urban Africa. Housing
prices are about 55 percent higher in urban areas of African countries
relative to their income levels. Urban transport, which includes
prices of vehicles and transport services, is about 42 percent more
expensive in African cities than cities in other countries. Like
households and workers, firms also face high urban costs.
Cross-country analysis confirms that manufacturing firms in African
cities pay higher wages in nominal terms than urban firms in other
countries at comparable development levels.

Nonetheless, risks to the outlook remain tilted to the downside,
including a sharper than expected slowdown in China, further decline
in commodity prices, delays in implementing the necessary adjustment
to the export price shock in affected countries, worsening drought
conditions, and political and security uncertainties

In 2016, growth is expected to remain at a lackluster 3.3 percent in
Sub-Saharan Africa. There is considerable variation in economic
performance across countries, with the slowdown concentrated among the
region’s largest commodity exporters. Growing economic
vulnerabilities, amid weakened policy buffers, continue to pose
challenges for policy.

International trade has been growing at a slower pace than in the 20
years preceding the international financial crisis (figure 1 2)
Globally, the annual growth in goods and services import volumes has
averaged 3 percent since 2012, compared with an average pace of 7
percent between 1986 and 2007

The fall in commodity prices represented a significant shock for the
region because of the large share of commodities in exports: fuels,
ore, and metals account for more than 60 percent of the region’s
exports compared with 16 percent for manufactured goods and 10 percent
for agricultural products

Average growth in oil-exporting countries is estimated to have slowed
from 5 4 percent in 2014 to 2 9 percent in 2015

Activity weakened significantly in non-energy mineral exporting
countries, including Botswana, Guinea, Liberia, Sierra Leone, South
Africa, and Zambia

In comparison, the slowdown has been less pronounced in most
oil-importing countries In Mozambique, delayed investment in the
liquefied natural gas sector as a result of weak commodity prices
weighed on GDP growth In Uganda, a large depreciation of the currency
spurred a tightening of monetary conditions that dampened economic
confidence and domestic demand Nevertheless, compared with the SSA
average, growth has remained robust in these countries, helped in part
by lower oil prices Among net oil importers, Ethiopia and Rwanda
continued to post solid growth, supported by public infrastructure
investment, private consumption, and a growing services sector
Elsewhere, growth remained buoyant in Kenya, amid improving economic
stability; Tanzania registered strong growth, underpinned by expansion
in construction and services sectors Despite terrorist attacks in some
member countries (Burkina Faso, Mali), the West African Economic and
Monetary Union continued to experience strong growth in 2015, helped
in part by favorable agricultural developments Côte d’Ivoire saw
broad-based growth, supported by a favorable policy environment,
rising investment, and increased consumer spending In Burundi, a
severe political crisis contributed to a contraction of output.

Public debt rose marginally in Nigeria in relation to GDP However,
some oil exporters (such as Angola, Gabon, and the Republic of Congo)
saw a large increase in their public debt/GDP ratio, exceeding 15
points in the case of Angola The increase in debt burdens was more
moderate in non-energy mineral exporting countries, with the
exceptions of Niger, Sierra Leone, and
Zimbabwe, where the public debt/GDP ratio rose by more than 10
percentage points Kenya, Mozambique, and Tanzania saw their debt
levels increase by 5 percentage points on average, while the increase
in Ghana was smaller In several countries (including Kenya and
Mozambique), the increase in government debt reflected rising
infrastructure spending or the construction of mining projects that
should support potential growth over the medium term In others (such
as Tanzania and Zimbabwe), exchange rate depreciations also
contributed to the rising debt levels Overall, debt ratios in 2015
were well above levels in 2011–13

already, countries, such as Mozambique, Tanzania, and Uganda are
experiencing delays in inward investment in their resource sectors,
caused by the decline in commodity prices

For instance, 32 countries in Sub-Saharan Africa (SSA) had current
account deficits that exceeded 5 percent of gross domestic product
(GDP) in 2014-15 (up from 25 in 2007-08) The number of countries in
the region with large fiscal deficits (exceeding 5 percent of GDP)
increased from two in 2007–08 to 15 in 2014–15 The evidence suggests
that fiscal deficits are associated with a deterioration of the
current account balance for SSA countries; consequently, SSA countries
face the challenge to balance their fiscal prudence while opening up
the domestic market to the world

Competitive and efficient input and output markets are essential to
support trade development, but African markets lack competition The
level of competition is lower in African countries than in competitors
and in many cases a single firm accounts for more than 50 percent of
the market in key sectors, such as trucking services and fertiliser
distribution

Conclusions

Kenya and East Africa looks like a bright star in what increasingly
looks like a darkening sub-Saharan sky. The shilling has been ‘Teflon’
since October and its performance is a signal in the noise. With the
exception of South Sudan [its going to take decades for this
leadership to get it] and Burundi [where the African Union blinked],
this region is shining bright. Kenya is expected to post a six per
cent GDP handle in 2016, Tanzania a seven per cent, Uganda around five
per cent, Ethiopia [even with a drought that has scorched farmlands]
probably eight per cent and the DR Congo [where the more intrepid
Kenyan corporates are stealing a March] somewhere around nine per
cent.

Meanwhile Nigeria, the biggest economy in SSA, will surely contract in
2016 and not least be- cause its president is determined not to
devalue the naira. The curve of history [from Soros skinning the Bank
of England in 1992, to the Mexican peso crisis in 1994, to the Thai
baht crisis in 1998 and many more too numerous to mention] confirm
that maintaining an artificial foreign exchange rate is a fool’s
errand and eventually carries the risk that the breakdown spirals out
of control and can become seriously disorderly. The official naira
rate is just below 200 to the dollar but no one is holding any store
by that price and that’s why absolutely no one is putting any more
money in Nigeria because they all know when the haircut is finally
imposed it’s going to be a big one. I find it just extraordinary that
such a brilliant president would risk it all on a bet on a single
number in a game of roulette. Those are the odds.

South Africa which is the second biggest economy in SSA will also
contract or be at zero per cent GDP this year. Here again, the David
Van Rooyen interlude at the Finance ministry was a step too far. A 10
per cent fall in a currency in a single hour [the rand flash crash]
confirms the complete loss of any credibility that President Zuma
might have had. Barclays PLC is desperately seeking the Africa exit
button and the reasons are around SA volatility. The third biggest
economy in SSA is Angola. Here we are in uncharted and possibly
revolutionary territory. The currency whose official rate is about 155
to the dollar is trading at 400 on the black market. When it comes to
SSA, the markets are the message.

The venerable Financial Times headlined an article last week “Kenya a
rare bright spot in EM gloom”. “Looking for a winner from the oil
price slump? Kenya could well be a prime candidate, in the emerging
world at least’’

51,428.08 +3.60 +0.01%

Dollar versus Rand 6 Month Chart INO 14.7160
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt’s president, Abdel Fatah al-Sisi, has been criticised at home
and abroad for agreeing to transfer two Red Sea islands to Saudi
Arabia that have been controlled directly from Cairo for more than 60
years.

The deal on Tiran and Sanafir paves the way for the construction of a
bridge linking Saudi Arabia to Sharm el-Sheikh, at the tip of the
Sinai peninsula. It was announced at the weekend during a visit by
King Salman of Saudi Arabia.

Egypt EGX30 Bloomberg +4.80% 2016
http://www.bloomberg.com/quote/CASE:IND

7,342.46 -61.31 -0.83%

LAGOS, Nigeria—In Africa’s top economy, the oil bust is beginning to
hit the streets.

With 187 million people, and trillions of dollars in untapped crude
oil, Nigeria was meant to power Africa’s rise. Instead, it is
becoming—for the moment—a symbol of how fast and far low oil prices
have dragged emerging markets down.

Months of dwindling oil revenue have prompted a scarcity of dollars
here, as the government hoards foreign currency to safeguard shrinking
reserves. That is starting to hit Nigerians rich and poor alike: On
Monday, the country’s stock market fell almost 3% on news that MSCI is
considering removing the country from its benchmark frontier markets
index.

Meanwhile, the World Bank said Nigeria’s economic growth slid to 2.8%
in 2015 from 6.3% the year before, and the International Monetary Fund
says this year’s growth will slip to 2.3%, slower than the population,
which adds 13,000 people daily.

Factories are closing because they can’t find dollars to import parts.
Supermarkets are struggling to keep shelves stocked. Power plants have
virtually stopped producing electricity because they can’t pay for
maintenance. New shopping malls are empty and ordinary citizens are
going to lengths to find some basic goods.

To keep his economy growing, President Muhammadu Buhari is traveling
to China this week, hoping to secure a multibillion-dollar loan for
new infrastructure, including railroads, spokesman Garba Shehu said.
This year, Nigeria may issue its first yuan-denominated bond, Finance
Minister Kemi Adeosun said on Saturday.

Back home, Africa’s top oil producer is unable to import enough
gasoline. Drivers in this city of 21 million have spent days inching
through miles-long lines to fill their tanks at the few pumps still
operating. To keep order, soldiers snap whips at oil can-toting
line-jumpers and break up fights between exasperated drivers.

“We are hungry and angry,” said Victor Eten, a taxi driver who slept
in his cab for three days to buy gas. “No shower, no toothbrush.…If
this continues, there will be big trouble.”

Until recently, Nigeria and its economic capital were symbols of
Africa’s new consumer class. Cineplexes, car dealerships and a
fast-food arms race—KFC and Domino’s, among others, opened here—spoke
to the aspirations of the continent’s largest city, Lagos. A decade of
7% economic growth brought Nigeria close to entering the world’s 20
largest economies. It also lured home Nigerian talent from jobs and
schools in the U.S. and Europe.

These days, the euphoria has dimmed in Africa’s most populous nation.
The government, which sees the downturn as an opportunity to
industrialize—breaking Nigeria’s dependence on imports in an economy
that relies on oil for three-quarters of revenue—also concedes that
its constituents could face years of pain.

“It will take a minimum of 18 months before we begin to see a
recovery,” said presidential spokesman Femi Adesina. “Through deft
economic engineering, things will bounce back, but it’s not going to
be magic. It’s not going to be overnight.”

Mr. Buhari has made progress in beating back the jihadist insurgency
Boko Haram since taking office in May. Soldiers now hold down towns
and highways once controlled by the Islamist group, whose violence
occurs far from the country’s economic nerve center.

He is also making moves against corruption: Each day at 3 p.m., the
new finance minister calls a different government agency and combs
through its expenditures, item by item.

But on the streets, daily frustrations are mounting. Electricity is so
scarce that the country’s national power plants didn’t produce a
single watt for several days last week—they couldn’t import parts and
services, said two senior members of Mr. Buhari’s administration.
Internet providers face similar woes.

Nigerians abroad are stuck with ATM cards they can’t use because the
central bank has limited withdrawals outside the country. Bitcoin
trades are up as Nigerian professionals scrounge for ways to move
money—and increasingly, themselves—out of the country.

“The structural worry I see is the middle class,” said Keith Richards,
a Guinness executive who has worked in Nigeria for four decades. “We
could see an exodus of the future of this country. People are already
leaving.”

Mr. Buhari says he hopes the scarcity of foreign goods will lead
Nigerians to buy from their own farms and factories, sparking an
industrial renaissance. Many new regulations encourage people to use
Nigerian steel, eat local rice, and spend within the country’s
borders. To show his commitment, the central bank governor recently
buried his mother in a made-in-Nigeria funeral, with food, drink and
decorations all sourced locally: “The central bank governor practiced
what he preached,” said one senior bank official.

Civil servants have been particularly hit: Mr. Buhari says his
government inherited an empty treasury after crude prices collapsed
starting in 2014. Twenty-seven of the country’s 36 states are
struggling to pay civil servants, he has said. He has asked lawmakers
to cut spending, but they have balked, leaving the president without a
budget he is willing to sign.

Revenue recently took a second hit when saboteurs went underwater to
break open a pipeline that carries 130,000 barrels of crude a day. The
government says that attack, which it sees as a political move to
undermine the president, cost the state $122 million in February
alone.

Aggravating the oil shock is a mounting foreign-currency crisis. In a
bid to defend the naira, Nigeria’s central bank has sharply restricted
the availability of dollars. A weekly committee stipulates which banks
are allowed to sell dollars and to whom, for what purchases, and at
what price.

The result: Businesses are increasingly unable to get the foreign
exchange they need to import spare parts, pay off foreign lenders,
travel internationally, and keep the economy running. Nigerians
entrepreneurial enough to find dollars sell them for as much as twice
the official exchange rate in back-alley trading shops, restaurants
and on the street.

Mr. Buhari’s administration, which rode into power in May 2015 with a
pledge to oust corruption, is running out of political room to act.
Last year, his supporters danced at rallies waving his campaign logo—a
broom—signifying a clean start. In recent months, newspapers have run
stories about disenchanted voters burning brooms in bonfires.

“They’ve got to get started,” said Bismarck Rewane, managing director
of Lagos research firm Financial Derivatives Co. “People are getting a
bit impatient. That means there has to be action.…There’s some tension
growing.”

From her laptop emporium in a four-story Lagos mall, saleswoman Joyce
Nwando has watched young professionals who were meant to power her
country’s rise vanish. A year ago, selfie-snapping shoppers packed the
food court: “It used to be that everything that happens in Lagos
happens here,” she said. Now, many stores are vacant, the lights are
often off and some shopkeepers say they may close in the next few
months. On Friday, a 3-D theater upstairs was about to screen the
debut of “Batman v. Superman.” Not a single customer was there.
“People really don’t have the money,” said the theater’s general
manager, Franson Davis. “Everybody is just waiting for the light at
the end of the tunnel.”

THE mutterings of discontent are growing louder in Nigeria’s street markets.

Conclusions

That Tsunami I was talking about in January 2015 [is still there but
it is getting bigger and bigger]

Meanwhile Nigeria, the biggest economy in SSA, will surely contract in
2016 and not least because its president is determined not to devalue
the naira. The curve of history [from Soros skinning the Bank of
England in 1992, to the Mexican peso crisis in 1994, to the Thai baht
crisis in 1998 and many more too numerous to mention] confirm that
maintaining an artificial foreign exchange rate is a fool’s errand and
eventually carries the risk that the breakdown spirals out of control
and can become seriously disorderly. The official naira rate is just
below 200 to the dollar but no one is holding any store by that price
and that’s why absolutely no one is putting any more money in Nigeria
because they all know when the haircut is finally imposed it’s going
to be a big one. I find it just extraordinary that such a brilliant
president would risk it all on a bet on a single number in a game of
roulette. Those are the odds.

Nigerian stocks fell on Monday after index provider MSCI said it could
remove Nigeria from its frontier markets index following the central
bank's introduction of currency controls last year.

MSCI said late on Thursday that it was seeking feedback from investors
on the ease of access to the Nigerian stock market and would announce
its decision on or before April 29.

Nigeria's stock market, which has the second-biggest weighting behind
Kuwait on the MSCI frontier market index, fell for a second day,
shedding 2.68 percent. The index is down 14 percent so far this year
in dollar terms, largely because of low oil prices and weakness in the
naira currency.

"The MSCI news has just complicated the already low confidence in the
market," said Pabina Yinkere, head of research at Vetiva Capital.

Akinbamidele Akintola, equity sales analyst at Renaissance Capital,
said funds that track the MSCI frontier index would have to exit
Nigeria, causing the stock market to falter.

The index of Nigeria's relatively liquid banking stocks shed 3.75
percent on Monday. Union Bank led the fallers, down 9.64 percent,
while Ecobank and United Bank for Africa both fell by 4.9 percent.

24,649.39 -678.67 -2.68%

Ghana Stock Exchange Composite Index Bloomberg -4.46% 2016
http://www.bloomberg.com/quote/GGSECI:IND

Kenya's attorney-general said in January it was considering a request
from Beijing to extradite 76 Chinese charged with cyber crime in Kenya
for trial in their homeland.

But Taiwan said some of these people were actually from Taiwan and
that a total of 23 of its people had been acquitted last Tuesday by a
Kenyan court and given 21 days to leave.

Yet China pressured Kenyan police to put eight of the Taiwanese
nationals on to a Chinese jet bound for China on Friday, Taiwan's
Foreign Ministry said. It did not say how they were taken.

"This is an uncivilized act of illegal kidnapping and a serious
violation of basic human rights," the ministry said in a statement,
adding it was demanding the immediate return of the eight.

Taiwan's ruling Democratic Progressive Party, which distrusts China,
also weighed in on the issue, demanding China "repatriate our people
and guarantee their legal rights".

On Thursday [the decision was made at 4 am in the morning], the
Central Bank placed Chase Bank into receivership. Chase Bank on
Wednesday published results in the Standard newspaper showing that its
earnings dropped from a profit of Sh2.3 billion in 2014 to a loss of
Sh742 million in 2015. Loans to employees and directors in 2016
amounted to 13.6 billion shillings versus the 3.24 billion shillings
reported the previous time. That 13.6b figure was about 50% more than
the core capital of the Bank. Chase Bank's non performing loans jumped
from Sh3 billion in 2014 to Sh11 billion in 2015. Evidently, it is
impossible to get a 360 degree perspective because the situation
remains really fluid. Deloitte Kenya qualified the Accounts, this
qualification was miniaturised in the Standard Newspaper Earnings
Restatement and Release. A Qualification of the Accounts is no small
thing and the act of miniaturising that Qualification is hardly
helpful either. The Chairman Zafarullah Khan and his side-kick Duncan
Kabui are wanted [as are the 5 National Bank Officials who also
recently were sent on leave].

Chase Bank is the third Bank the Central Bank of Kenya has taken over
since Patrick Njoroge became governor last July. A fourth bank
National Bank has sent its chief executive and five senior managers on
leave while its accounts are investigated. The First overarching Point
to note is that we have now entered a new more ''rules-based'' system
of regulation. What is also clear is that we were previously in a more
permissive environment. Tier 3 Banks are finding themselves at the
Bleeding Edge of this move to a more ''rules-based'' System. Years of
resisting increased Capital requirements, has meant that these Tier 3
Banks are pirouetting their businesses on ''wafer-thin'' capital.
Recent Events [Dubai Bank, Imperial Bank, National Bank and Chase
Bank] now means Investors and Depositors are placing considerably less
credence on the accounts as presented. Then in a ''Double-Whammy'',
Depositors have embarked on a Deposit Flight to Quality further
undercutting them. Without Shareholders now stumping up bucketloads of
Capital, these Banks are in effect now ''Zombie'' Banks. The Process
of Consolidation is now market-led. I appreciate the Authorities are
keen to keep this orderly and not allow it to turn disorderly. The
important Point for the Authorities is not to provide a blanket
''Put'' Option and to erect a Firewall in the right place. The Central
Bank Governor has a fiendishly difficult Brief.

Social Media is not responsible for these Banks being placed into
receivership. When You filter out the Noise, Social Media has proven a
pre-eminent Signal and Early Warning System. In fact, I would argue
that recent events confirm the need for real-time surveillance. I
recall many years ago the totemic Hans Joerg Ruedloff [who was then
Chairman of Credit Suisse First Boston] telling me ''CSFB does not
takes [credit] losses'' meaning you get caught on the wrong side of a
Chase Bank type event and You're fired. I would have thought recent
events make a Prima Facie Case for Real Time Surveillance both at the
level of the Regulator and at the level of various Credit Committees.
The Cutting Edge of the Financial Markets has already moved in this
direction. Smart Money flew the day after Imperial Bank, I am afraid
to say.

There was an interesting story in the Sunday Nation, implying that the
Events as played out were a part of an elaborate Bear Raid by
International Investors, who were looking to upscale their
shareholding in Chase Bank. Let me take you back to 2008, when Lehman
crashed and Bob Diamond [then CEO of Barclays PLC] paid just about any
price [to the State of Qatar and this arrangement became the subject
of some controversy] to keep Barclays out of the clutches of a State
Rescue. The Point I am making is that the Game is lost the moment you
are placed in receivership. Thats what Bob Diamond understood.

Kenya has 42 banks or one Bank per million. This is sub-optimal. The
more optimal Outcome is Fewer but bigger Banks. It is clear now that
market Forces have the bit between their Teeth and that we are now
embarked on a market-led consolidation process.

Across the Economy, we are witnessing a Flight to Quality. The Stock
Market is placing a Premium on Companies they feel are properly
governed [EABL, Safaricom, KCB and so forth], where they know they
will not be caught out by an announcement that overnight the entire
Capital and more has been lent out to Insiders. The Market is now
placing an enormous discount on those Companies where they feel
Governance is challenged. This Trend has a lot further to run.

Ndegwa Muhoro, the Directorate of Criminal Investigations boss, said
Deloitte — which is the external auditor of the troubled banks — had
been included on the list of those under investigation and will be
required to record a statement.

Mr Muhoro said Deloitte and Central Bank of Kenya’s (CBK) inspection
department officials, have been included in the list of those under
investigation for aiding or abetting the massive fraud and theft that
is alleged to have taken place in banks.

“The team will also grill the firms that audited the banks in question
and officers from the Central Bank of Kenya’s supervisory department,”
Mr Muhoro said, meaning the CBK itself has not been spared the
scrutiny.

Deloitte, however, said it was confident of executing its professional
responsibilities and in compliance with existing rules and standards
that define its mandate.

“Deloitte remains committed to the highest standards of audit quality.
We stand by the quality of our work and will continue to meet our
obligations as auditors. We are also confident in the sufficiency and
completeness of audit procedures and quality reviews, and the effect
those procedures and the resulting outcome may have had on our audit
opinions,” Sammy Onyango, the CEO, Deloitte East Africa, said.

According to the dictionary, bifurcate means to divide into two parts
or branches, or forked or into two parts, as the Y-shaped styles of
certain flowers. What is clear is that the Nairobi Securities Exchange
has bifurcated and this trend has accelerated during the recent
earnings announcement season. The Nairobi All Share is up 1.19 per
cent this year and at a 17-week high. The Nairobi NSE20 Index is 1.09
per cent down and at an 11-week high. However, these benign year-to-
date returns are veiling a big bifurcation. Winners are winning big
and the losers are losing their shirts.

Nairobi All Share Bloomberg -0.02% 2016
http://www.BLOOMBERG.COM/quote/NSEASI:IND

145.67 -0.83 -0.57%

3,958.57 -40.76 -1.02%