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The Latest Daily PodCast can be found here on the Front Page of the site
http://www.rich.co.ke

I was part of the Panel Discussion

Macro Thoughts

Home Thoughts

There are two Africas now. The average age in Sub African Africa is
20. These folks are all connected, surfing the now in a way that is
breathtaking. I work not more than 10 minutes walk from the Norfolk.
It is urban, highly aspirational, tech savvy (after all, Kenya was the
laboratory that gave birth to the mobile money sensation M-Pesa], it’s
a hub. The traffic can be frightful but it’s on the move. Nairobi has
an edginess which can become very intense. And as the year was ending,
I really wanted to step off the train. I wanted to feel a different,
more ancient African pulse. We had been to the Fairmont Mara five
years ago.

I do miss the Seaside.

Trying to persuade the Mrs. to road trip to Moyale.

Watch the Love-making of a Leopard in this documentary narrated by Jeremy Irons

“And I like large parties. They’re so intimate. At small parties there
isn’t any privacy.” ― F. Scott Fitzgerald, The Great Gatsby

“In his blue gardens men and girls came and went like moths among the
whisperings and the champagne and the stars.” ― F. Scott Fitzgerald,
The Great Gatsby

With their tiny propellers buzzing, the fleet of Chinese aircraft,
little larger than model planes, are flung into the air one at a time
by huge rubber bands. Soon the sky is full of toylike drones flying in
formations over unidentified mountains in China.

This unlikely spectacle could represent a revolution in military
affairs. The June 11 demonstration of “swarm” technology by China
Electronics Technology Group, a state-owned high-tech company,
included 119 drones. That made it the world’s largest-ever swarm,
according to CETC, breaking a US-held record.

Each tiny aircraft — bought online for a few hundred dollars — is
loaded with software and sensors capable of communicating with the
other drones in the swarm. Developers are working towards a future
where thousands could operate in sync, identifying and attacking
targets. In theory, such swarms could feature drones fitted with
missiles or warheads capable of sophisticated attacks designed to
overwhelm defences with their sheer numbers.

“This goes all the way back to the tactics of Attila the Hun,” says
Randall Steeb, senior engineer at the Rand Corporation in the US. “A
light attack force that can defeat more powerful and sophisticated
opponents. They come out of nowhere, attack from all sides and then
disappear, over and over.”

China’s two-decade effort to modernise its military has seen it
develop stealth fighters, guided missile destroyers and ballistic
“carrier killer” missiles, while also reducing troop numbers. It will
spend at least $152bn this year on its military, but only in a few
areas has it come close to surpassing US technology. Beijing is now
betting that swarms of drones, low-tech hardware knitted together with
high-tech artificial intelligence, will become a weapon of the future.

For example, swarms of autonomous boats could appear when a US ship
sails close to a disputed island in the South China Sea and block its
path. Referred to by the US military as “grey-zone threats”, they
could leave a superior military with a dilemma about how to respond
without appearing to be the aggressor.

“Swarming is currently considered to be one of the most promising
areas of defence technology development in the world,” says Vasily
Kashin, an expert on China’s military at the Higher School of
Economics in Moscow. “The Chinese are prioritising it.”

As is Washington. “Clearly the US and China are in some sort of weird
swarm race,” says Paul Scharre, a senior fellow at the Center for a
New American Security who writes on military robotics. “A swarm with
10 more individual drones isn’t necessarily better. What matters are
the things you can’t see. It’s the algorithms that govern the swarm
behaviour.”

Conclusions

Xi Jinping behaves as if China has made a great military Leap forward.

Conclusions

Narendra Modi will lose an arm wrestle with Xi Jinping.

Russian nuclear-capable strategic bombers have flown a rare mission
around the Korean Peninsula at the same time as the United States and
South Korea conduct joint military exercises that have infuriated
Pyongyang.

Russia, which has said it is strongly against any unilateral U.S.
military action on the peninsula, said Tupolev-95MS bombers, code
named “Bears” by NATO, had flown over the Pacific Ocean, the Sea of
Japan, the Yellow Sea and the East China Sea, prompting Japan and
Seoul to scramble jets to escort them.

The flight, which also included planes with advanced intelligence
gathering capabilities, was over international waters and was
announced by the Russian Defence Ministry on the same day as Moscow
complained about the U.S.-South Korean war games.

“The US and South Korea holding yet more large-scale military and
naval exercises does not help reduce tensions on the Korean
Peninsula,” Maria Zakharova, a spokeswoman for the foreign ministry,
told a news briefing in Moscow.

Another Senate Republican aide added, “Kelly is the only thing saving
America right now.”

I searched through two recent datasets (propagators of #FireMcMaster
and #UniteTheRight hashtags) and found 824 such accounts. Conspirador
Norteño
Searching their followers for similarly named accounts, and
subsequently their followers' followers yielded 63099 accounts.
Conspirador Norteño
Here's the follower network formed by those 63099 accounts.  Larger
circle = more accounts with the 8-digit numbers among its followers
Conspirador Norteño
Let's look at the largest node in the network, DavidJo52951945.  This
account's been around for a while - since early 2013, 136K tweets.
Conspirator Norteño
Here's an interesting observation - David is posting 8 AM - 8 PM every
day, Moscow time.  Almost like it's his job or something. Conspirator
Norteño

I have no doubt that Putin ran a seriously 21st predominantly digital
programme of interference which amplified the Trump candidacy. POTUS
Trump was an ideal candidate for this kind of support. Trump is a
linguistic warfare specialist.

Along comes the 2016 US election, and DavidJo52951945 is tweeting some
very familiar-sounding material about Hillary Clinton. Conspirator
Norteño
Very alt-right-esque messaging about Michael Flynn and "deep state".
Bear in mind that DavidJo52951945 is posing as British. Conspirator
Norteño
I do have to say, this is one of the more interesting troll accounts
I've seen (and almost certainly human-operated, not a bot).
Conspirator Norteño
Conclusion?  A) Almost certainly a Russian invention and B) a far more
influential social media node than your average bot. #TrumpRussia
Conspirator Norteño

non-linearity, you have to learn how to navigate a linear system (the
new 21st digital ecosystem) in a non-linear way. When you launch a
social media campaign where a 100 bots repeat the same thing verbatim,
like Mombasa did last week, then your very linearity is a monumental
‘’look its me’’ sign.

Don DeLillo, who is a prophetic 21st writer, writes as follows in one
of his short stories:
The specialist is monitoring data on his mission console when a voice
breaks in, “a voice that carried with it a strange and unspecifiable
poignancy”.
He checks in with his flight-dynamics and conceptual- paradigm
officers at Colorado Command:
“We have a deviate, Tomahawk.”
“We copy. There’s a voice.”
“We have gross oscillation here.”
“There’s some interference. I have gone redundant but I’m not sure
it’s helping.”
“We are clearing an outframe to locate source.”
“ Thank you, Colorado.”
“It is probably just selective noise. You are negative red on the
step-function quad.”
“It was a voice,” I told them.
“We have just received an affirm on selective noise... We will
correct, Tomahawk. In the meantime, advise you to stay redundant.”
 The voice, in contrast to Colorado’s metallic pidgin, is a melange of
repartee, laughter, and song, with a “quality of purest, sweetest
sadness”.
“Somehow we are picking up signals from radio programmes of 40, 50, 60
years ago.”

Gul Ahmad, an infant boy suffering from acute malnutrition, is covered
by his mother's scarf while being treated in the therapeutic feeding
centre ward at the Medecins Sans Frontieres (MSF) administered Boost
Hospital in Lashkar Gah, the capial of Helamnd Province in southern
Afghanistan. According to MSF staff, malnutrition is a chronic problem
in Afghanistan.

A Tanzanian court on Thursday began hearing a case against two
co-founders of a whistleblower website who are charged with
obstructing justice by refusing to reveal the identities of users who
post details of suspected corrupt officials.

Prosecutors charged Micke William and Maxence Melo Mubyazi, owners of
the Jamiiforums site, under the Cybercrimes Act.

Several people have been charged under the law, which came into effect
in 2015, and it is viewed by rights groups and the opposition as part
of efforts by President John Magufuli’s government to limit liberties
such as freedom of expression.

If convicted, William, 27, and Mubyazi, 40, could face a fine of up to
3 million shillings ($1,300) or a jail term of at least one year, or
both. They denied the charges.

Euro 1.1785
Dollar Index 93.33
Japan Yen 109.68
Swiss Franc 0.9654
Pound 1.2804
Aussie 0.7905
India Rupee 64.068
South Korea Won 1128.58
Brazil Real 3.1479
Egypt Pound 17.6990
South Africa Rand 13.1774

Vanadium prices have risen 89 percent this year, according to Metal
Bulletin data. The metal doubled in 2016 following three consecutive
annual declines.

Emerging Markets

Frontier Markets

The ruling Popular Movement for the Liberation of Angola led a
provisional vote count in Wednesday’s election in Africa’s
second-biggest oil producer, winning 64.6 percent with almost
two-thirds of the results reported.

The main opposition Union for the Total Independence of Angola, or
Unita, received 24.4 percent, Julia Ferreira, a spokeswoman for the
National Electoral Commission, told reporters Thursday in Luanda, the
capital. The Broad Consensus for Angolan Salvation-Electoral Coalition
party, the second-biggest opposition group, obtained 8.6 percent, she
said.

The MPLA will probably gain control of Angola’s 220-member legislature
and have its presidential candidate, Joao Lourenco, 63, succeed
outgoing President Jose Eduardo dos Santos. Voter turnout was 77
percent, according to the electoral commission. Dos Santos, Africa’s
second-longest serving ruler who led Angola through a civil war, an
oil-fueled boom and a bust, is stepping down after 38 years in power.

“These results aren’t real,” Jose Pedro Katchiungo, a Unita official,
told reporters in Luanda. “The National Electoral Commission was a
disaster.”

Though seldom seen in public, he has been a looming presence in daily
life for as long as most Angolans can remember, maintaining fierce
control over the country throughout its devastating civil war and
recent oil boom.

He is “an accomplished and shrewd economic and political dealmaker
with an instinct for political survival,” said Alex Vines of Chatham
House, a British think-tank.

Married to the glamorous former air hostess Ana Paula, who is 18 years
his junior, his children include Isabel, who is head of the
state-owned Sonangol oil company and reputed to be Africa’s richest
woman – worth $3 billion.

As head of the military, police and cabinet, the president operates
with few constraints.

He chooses senior judges and had MPLA allies in all public agencies,
including the supposedly independent electoral commission.

The state keeps a firm hand on the media, and his picture often
appeared on the front pages of newspapers as well as on countless
billboards and posters.

Conclusions

There is one thing about the general elections of 23 August we can be
almost certain of: Defence Minister João Lourenço, hand-picked by
President José Eduardo dos Santos, remains stoutly loyal to his mentor
and should win the Presidency comfortably. Then the questions start.
Will a President Lourenço also feel the need to extend that loyalty to
Dos Santos's family, some of whom have their own billion dollar
empires?

Lourenço's campaign on national television and social media has made
much of the need to clamp down on corruption and restructure tne
economy away from a parasitic dependence on revenues from opaque oil
sales. At his last campaign rally on 18 August, Lourenço acknowledged
the growing hardships of the 'povo' (people) as he spelt out plans to
run a more productive and export-oriented economy. He made no links
between the stratospheric wealth of the elite and mass poverty.

Other members of the ruling Movimento Popular de Libertação de Angola
are less constrained. Opposition to the Dos Santos 'family business'
in particular, has been growing in MPLA circles. Recently, a respected
general, Manuel Mendes de Carvalho Pacavira 'Paka', expressed out loud
what could never previously be said in public when he threatened to
put presidential daughter Isabel dos Santos in prison, and openly
called her father corrupt in a July interview with the Voice of
America's Portuguese service. That outburst may explain the statute
passed this year that gives tenure to Dos Santos's appointees heading
the armed forces and security services.

Most Angolans, and foreigners doing business there, know that Isabel
is a multi-billionaire, and her brother, José Filomeno de Sousa dos
Santos 'Zenu', controls Angola's Sovereign Wealth Fund, one of the
biggest in Africa. Much less well-known  is the pervasive role in the
mass media of a company run by two of President Dos Santos's
lesser-known children, the 39-year-old Welwitschia 'Tchizé' and her
younger brother José Paulino, 32, aka 'Coréon Dú' (AC Vol 53 No 2,
Marques takes them on).

Semba Comunicação has taken immense sums of money from the public
purse to produce mass media propaganda for domestic and foreign
consumption, some of it through a heavily subsidised television
station, TPA2 (Televisão Pública de Angola). 'They are the real
Ministry of Culture,' one former culture ministry civil servant told
Africa Confidential. 'When and where the money for cultural promotion
goes is their decision and they answer to nobody about how the money
is spent,' he added. Although severely hit by Angola's chronic foreign
exchange shortage, Semba is still highly influential.

After the elections, Lourenço will come under pressure to rein in the
Dos Santos family's business empire. How far and fast he goes may be
the first big test of his Presidency.

Copper output in Congo, Africa's top producer of the metal, rose 15
percent year-on-year in the first half of 2017 to more than half a
million tonnes, and cobalt production surged 27 percent to almost
40,000 tonnes, the central bank said.
But despite higher commodity production, Democratic Republic of
Congo's central bank forecast year-end inflation at 52.6 percent, up
from an earlier projection of 48 percent and from last year's figure
of 25 percent.
It gave precise H1 figures for copper and cobalt as 553,811 tonnes and
39,535 tonnes, respectively.
Increasing prices - copper has risen nearly 19 percent on the London
Metals Exchange this year - and ramped up production at several large
mines has boosted Congo's output of major metals after two years of
stagnation.
However, a lag in tax revenues from the mining sector and high
government deficits have left the country facing a fiscal crisis with
only about three weeks of imports cover left.
The franc currency is set to lose more than a third of its value this
year, which has fuelled Congo's worst inflation since the global
financial crisis in 2009.

The rest of Africa had badly lagged this global rally. Here in
Nairobi, the All Share crashed -10.11% from the start of the year
through March 8.  The Nairobi NSE20 slumped -12.467% through January
30 when it closed at a multi- year low. Everyone I spoke to was ready
to throw in the towel. Over on the West side, Nigeria’s All Share was
-8.53% through March 6 of this year. Ghana has been a stand-out this
year, but overall the sub-Saharan Africa’s markets started the year
seriously in the doldrums. Well, we have seen quite a meaningful
rebound of late. The Nairobi All Share is now +3.34% in 2017 and at a
six- month high, the NSE-20 Share Index is also at a six-month high.
The Nigerian All Share is now +4.9% in 2017 and at a nine-month high
and just came off an eleven session winning streak. There has been a
significant mood change.

56,588.99 +426.69 +0.76%

Dollar versus Rand 6 Month Chart INO 13.1774
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

South Africa is considering selling its stake in landline provider
Telkom to fund a 10 billion rand ($757 million) bailout of South
African Airways (SAA), a Treasury spokesman said on Wednesday.

The airline runs one of Africa's biggest fleets but is loss-making. It
received state funds in July to help to repay debts and also depends
on government debt guarantees of about 20 billion rand.

"It's an option among others we are looking into, and nothing has been
finalised," Treasury spokesman Mayihlome Tshwete said.

Ghana Stock Exchange Composite Index Bloomberg +38.44% 2017
http://www.bloomberg.com/quote/GGSECI:IND

The annual bill for paying 700,000 public employees, including elected
leaders, stands at 627 billion shillings ($6.1 billion), which is
equal to half of the government's revenue.

The Salaries and Remuneration Commission (SRC), which sets wage
levels, said last month it would slash salaries of top officials,
including the president and lawmakers, to save 8.5 billion shillings a
year.

The cuts include scrapping a 5 million-shilling car grant given to
every legislator, removal of certain allowances and a 90,000-shilling
reduction in basic monthly pay.

Kenyans have reacted angrily to lawmakers' demands for the reversal of
the cuts. They posted fiery messages on social media, threatening to
recall their members of parliament, and forcing at least one MP to
perform a U-turn on television and say she would "humbly" accept the
SRC's decision.

Many elected representatives lost their seats to newcomers and
independents in the Aug. 8 election, and Kenyatta attributed that
partly to voter displeasure with profligacy.

"It is shameful that we are barely a week away and they (legislators)
have not recognised the issues that made Kenyans angry," he said.

Conclusions

No way

Maina Kiai, a human rights activist, was held for up to two hours at
the country’s largest airport while trying to board a flight from
Nairobi to Amsterdam on Sunday. Campaigners said it was the latest in
a series of attempts to harass activists, following the country’s
recent disputed elections.

“It’s something that has never happened to me before,’” said Kiai. “I
went to the immigration counter to get my passport stamped, as we all
do when we leave the country. The attendant said, ‘Would you please
wait in the room, the boss wants to talk to you.’”

Kiai, the former UN special rapporteur on the rights to freedom of
peaceful assembly and of association, was told he needed clearance to
leave the country. After speaking to the media, he was able to contact
to the director of immigration, who eventually allowed him to board
his plane. “He said, ‘Oh, sorry, it’s a misunderstanding, you can fly
now’. He refused to tell me why I was not questioned,” Kiai said.

Par Value:                  4/-
Closing Price:           190.00
Total Shares Issued:          266321115.00
Market Capitalization:        50,601,011,850
EPS:             26.94
PE:                 7.053

Prominent Kenyan commercial bank

H1 Government securities 105.408678b vs. 78.603059b +34.103%
H1 Loans and advances to customers 191.469262b vs. 178.526591b +7.250%
H1 Total assets 343.710264b vs. 301.915966b +13.843%
H1 Customer deposits 256.338364b vs. 216.114485b +18.612%
H1 Total equity 48.545220b vs. 40.904423b +18.680%
H1 Cash and cash equivalents at the end of period 1.884997b vs.
3.213457b -41.341%
H1 Interest income 16.851275b vs. 16.729801b +0.726%
H1 Interest expense [7.357449b] vs. [7.161738b] +2.733%
H1 Net interest income 9.493826b vs. 9.568063b -0.776%
H1 Net fees and commission income 1.623847b vs. 1.513173b +7.314%
H1 Foreign exchange income 793.840m vs. 895.683m -11.370%
H1 Operating income 12.032853b vs. 12.077567b -0.370%
H1 Operating expenses [5.279977b] vs. [4.630116b] +21.679%
H1 Impairment loss on loans and advances [1.715759b] vs. [2.190674b] -21.679%
H1 Profit from operations 5.037117b vs. 5.256777b -4.179%
H1 Profit before income tax 5.045547b vs. 5.259935b -4.076%
H1 Profit for the period 3.412475b vs. 3.621869b -5.781%
Basic and diluted EPS 12.00 vs. 12.68 -5.363%
No interim dividend

Conclusions

+34.103% Expansion in GOK Bond positions
Customer loan Book +7.25%
Operating Expenses +21.679%
Looks a value proposition at a Trailing PE of 7.053

Par Value:                  5/-
Closing Price:           199.00
Total Shares Issued:          362959275.00
Market Capitalization:        72,228,895,725
EPS:             14.44
PE:                 13.781

H1 Turnover 17.535b vs. 19.111b -8.247%
H1 Operating costs [14.879b] vs. [14.962b] -0.555%
H1 Operating profit 2.656b vs. 4.149b -35.985%
H1 Investment income 97m vs. 218m -55.505%
H1 Finance costs [28m] vs. [18m] +55.556%
H1 Profit before tax 2.672b vs. 4.272b -37.453%
H1 Profit for the period 1.848b vs. 2.899b -36.254%
EPS 4.39 vs. 7.15 -38.601%
Cash and cash equivalents at the end of the period 7.405b vs. 10.456b -29.179%
Interim dividend 2.50 vs. 6.00 -58.833%

Company Commentary

The business in Kenya experienced a difficult business environment
characterised by a contracting market, low private sector investment
resulting in slump in construction activity especially in the
individual home builder segment, delays in some infrastructure
projects, and drought conditions. In contrast, the business in Uganda
enjoyed good market conditions in both domestic and export markets
with Hima recording good performance.
Operating Profit reduced from 4.1b to 2.7b due to lower revenues,
higher coal prices driven by increased world coal prices and higher
power costs following drought conditions in Kenya.
Profit before Tax declined to 2.7b from 4.3b due to lower operating
profit, impact of lower cash deposits at lower interest rates and
lower foreign exchange gains.
Cash decreased to 7.4b due to payments for the capacity expansion in
both Kenya and Uganda together with lower cash from operations.
phase 1 of the capacity expansion project in both Kenya and Uganda tat
will see the Group's cement grinding capacity increase by 1.8m tons is
on course commissioning of both projects scheduled for mid 2018
Interim Dividend 2.50 versus 6.00

Conclusions

Poor H1 see above Company Commentary.

Nairobi All Share Bloomberg +26.51% 2017
http://www.BLOOMBERG.COM/quote/NSEASI:IND

168.69 +1.16 +0.69%

Par Value:                  5/-
Closing Price:           108.00
Total Shares Issued:          19525446.00
Market Capitalization:        2,108,748,168
EPS:             6.47
PE:                 16.692

H1 Revenue 515.631m vs. 539.876m -4.491%
H1 Earnings before finance income and taxes 42.551m vs. 75.775m -43.846%
H1 Net finance income 27.780m vs. 24.810m +11.971%
H1 Exchange gains/ [Losses] [9.304m] vs. [4.368m] -113.004%
H1 Profit before tax 61.027m vs. 96.217m -36.574%
H1 Profit for the year 42.710m vs. 68.116m -37.298%
Basic EPS 2.19 vs. 3.49 -37.249%
Interim dividend 2.20 vs. 2.20 –
Cash and cash equivalents at the end of the period 102.173m vs.
132.801m -23.063%
Total equity 1.735894b vs. 1.745465b -0.548%

Conclusions

Soft H1 Have paid out 100.45% of H1 EPS as H1 Dividend

Insurance Regulatory Authority (IRA) now requires life insurance firms
to use gross premiums valuation (GPV) when providing for liabilities
in their books rather than net premiums valuation (GPV) previously.

That had gifted Britam with Sh1.5 billion in savings on claims, which
was factored in half-year net profit for 2016.

“In 2016, we released a lot of reserves after we switched to GPV. We
don’t have a lot of that year. It has normalised and you can see that
in this year’s profitability number,” group managing director Benson
Wairegi told investors Thursday.
The firm booked Sh680 million more in gross premiums in the six-month
period to Sh11.69 billion from Sh11.01 billion in the same period a
year ago.

Net claims, however, rose 84.76 per cent to Sh6.67 billion, Britam
reported, eating into net profit for the period under review.

4,052.54 +23.98 +0.60%

Every Listed Share can be interrogated here
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