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Satchu's Rich Wrap-Up
Thursday 05th of November 2020

.@bankofengland said to be considering a move into negative rates - @Telegraph via @Reuters
World Of Finance

The Bank of England (BoE) is said to be considering a move into negative interest rates, the Telegraph newspaper reported late on Wednesday, without citing any sources, ahead of the central bank’s November monetary policy decision on Thursday.

The BoE is in the midst of a review of how negative interest rates would work in Britain if necessary. It is still talking to banks about their preparedness.

None of the economists polled by Reuters expect an imminent move into negative rates. 

They expect the BoE to expand its asset purchase programme by 100 billion pounds to 845 billion pounds due to the deteriorating economic outlook as England enters a second COVID lockdown.

However, the Sun newspaper, citing unnamed sources, reported that the BoE is planning a much bigger programme of quantitative easing than the expected addition of 100 billion pounds.

The addition is likely to be around 150 billion pounds but it could also be as high as 200 billion pounds, the report added, without quoting sources.

Finance minister Rishi Sunak is also due to give an update on economic support measures related to the lockdown on Thursday.

According to the Telegraph report, Sunak is expected to confirm that furloughed workers will get 80% of their wages so long as their businesses are mandated to shut.

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19-OCT-2020 :: ALL G7 CURVES 0-10 WILL BE NEGATIVE IN 2021
World Of Finance

I listened to the soothing platitudes of the IMF and the World Bank and now those August Institutions have ditched Talk of a ‘’V’’ shaped recovery but still hold fast to a Quaalude level Snap Back next year.

Quaaludes ‘’promote relaxation, sleepiness and sometimes a feeling of euphoria. It causes a drop in blood pressure and slows the pulse rate. These properties are the reason why it was initially thought to be a useful sedative and anxiolytic It became a recreational drug due to its euphoric effect’’

They are dreaming

We are spinning deeper into negative interest rate territory



The virus is not correlated to endogenous market dynamics but is an exogenous uncertainty that remains unresolved #COVID19







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14 NOV 16 :: Here comes President @realDonaldTrump @TheStarKenya
Law & Politics

Trump confounded the pollsters and the traditional media echo chamber and was ranked a rank outsider at 4-1 in a two horse race just a few short hours before the final result was known.

Comic-turned-politician Beppe Grillo, co-founder of Five Star, said

“This is the deflagration of an epoch. It’s the apocalypse of this information system, of the TVs, of the big newspapers, of the intellectuals, of the journalists.”

And this is another important point, traditional media has lost its position of control. It’s been upended by the internet which allowed insurgent politics to broadcast over the top.

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“This is a major fraud on our nation,” said Mr Trump, adding his #Election2020 campaign would ask the Supreme Court to intervene. @TheEconomist
Law & Politics

“We want all voting to stop. We don’t want them to find any ballots at four o’clock in the morning and add them to the list.”

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Biden est maintenant donné largement favori par les bookmakers. @vincentglad
Law & Politics

Retournement de situation spectaculaire vers 11h ce matin avec les résultats qui se resserrent (en faveur de Biden) dans le Wisconsin, le Michigan et en Pennsylvanie.

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The Hollow Men Mistah Kurtz - he dead
Law & Politics

This is the way the world ends

This is the way the world ends

This is the way the world ends

Not with a bang but a whimper.

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This is how the presidential odds have moved since yesterday afternoon on the Smarkets betting market. @johnauthers
Law & Politics

With the way Wisconsin and Michigan look at present, 82% chance for Biden looks about right. But what a night, and what a week ahead:

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―They fancied themselves free,wrote Camus, ―and no one will ever be free so long as there are pestilences

―In this respect, our townsfolk were like everybody else, wrapped up in themselves; in other words, they were humanists: they disbelieved in pestilences.

A pestilence isn't a thing made to man's measure; therefore we tell ourselves that pestilence is a mere bogy of the mind, a bad dream that will pass away.

But it doesn't always pass away and, from one bad dream to another, it is men who pass away, and the humanists first of all, because they have taken no precautions.

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Currency Markets at a Glance WSJ
World Currencies


Dollar Index 93.388

Japan Yen 104.440

Swiss Franc 0.911475

Pound 1.29464

Aussie 0.716705

India Rupee 74.3179

South Korea Won 1129.095

Brazil Real 5.6640000

Egypt Pound 15.715900

South Africa Rand 15.9684

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There is frequently a "coming to Jesus" meeting in Beijing where any number of things can happen
World Of Finance

And there is frequently a “coming to Jesus” meeting in Beijing where any number of things can happen to a trustee – from forcing him to sell off non-policy debt-inducing assets, to accepting “retirement” to charges of corruption and a life sentence in prison….and no more access to the CCP’s official black hair dye #6

Indeed, CCTV showing court proceeding clips where the former celebrity tycoon now has white hair is the greatest indignity that can be levied on a person in political China.  The citizenry knows justice (such as it is) has been served.  

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[Read] The Chairperson of the @_AfricanUnion Commission @AUC_MoussaFaki congratulates President Magafuli for election victory in #Tanzania

He commends the people and all electoral stakeholders, Political Parties and Candidates, the Media and Civil Society Organisations for the peaceful conduct of the elections.

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10 NOV 14 : African youth demographic {many characterise this as a 'demographic dividend"} - which for Beautiful Blaise turned into a demographic terminator

Martin Aglo, a law student from Benin, told Reuters: “After the Arab Spring, this is the Black Spring”.

We need to ask ourselves; how many people can incumbent shoot stone cold dead in such a situation – 100, 1,000, 10,000? 

This is another point: there is a threshold beyond which the incumbent can’t go. Where that threshold lies will be discovered in the throes of the event.

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.@NobelPrize winner #AbiyAhmedAli sends army into opposition Tigray region @ReutersAfrica

Ethiopia said on Wednesday it has begun military operations in the Tigray region, after the prime minister accused the local government of attacking federal troops.

In September, Tigray held regional elections in defiance of the federal government, which called the vote “illegal”. The row has escalated in recent days with both sides accusing each other of plotting a military conflict.

Military operations in the region had commenced, Prime Minister Abiy Ahmed’s spokeswoman Billene Seyoum told Reuters, without giving further details.

Earlier on Wednesday, the Tigray People’s Liberation Front (TPLF) attempted to steal artillery and other equipment from federal forces stationed there, Abiy’s office said in a statement.

“The last red line has been crossed with this morning’s attacks and the federal government is therefore forced into a military confrontation,” the statement said.

The Ethiopian National Defence Forces have been ordered to carry out “their mission to save the country and the region from spiralling into instability”, it added said.

Tigray’s local government said that the Northern Command of the federal military, which is stationed in the region, had defected to its side. Billene dismissed the claim as “false information”.

Internet access monitor NetBlocks said that the Internet had been shut down in the region, confirming reports that authorities had shut down telephone and Internet services.

Debretsion Gebremichael, the president of the Tigray region, said on Monday that Abiy’s government was planning to attack the region to punish it for holding the September election.

The developments in Ethiopia could have grave consequences for the region, warned Asnake Kefale, an associate professor of political science at the University of Addis Ababa.

“This conflict could destabilise the wider region if the Ethiopian army can’t get the violence across the country under control,” Asnake said.

Tigrayans ruled Ethiopian politics since guerrilla fighters ousted a Marxist dictator in 1991, but their influence has waned under Abiy. Last year, the TPLF quit his ruling coalition.

Since Abiy came to power in 2018, many senior Tigrayan officials have been detained, fired or sidelined, in what the federal government describes as a clamp-down on corruption but Tigrayans see as a means to quell dissent.

Tigray’s population makes up 5% of Ethiopia’s 109 million people, but it is wealthier and more influential than many other, larger regions.

Its army is a well-trained force dating back to the 1980s when it led the guerrilla movement that brought the Ethiopian People’s Revolutionary Democratic Front coalition to power, analysts say.

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“You can’t realistically begin a constructive and open dialogue while someone is holding a gun to your head.” @Reuters

It still has the option of paying the coupon to avoid default, with its next coupon payment not due until January.

Creditors said the government had not contacted them ahead of launching the consent solicitation and had so far not presented a convincing plan to make its debt sustainable.

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Africa Macro – Ten years on - a review of the trends driving Africa's allure @SACFreemantle H/T @RichardHumphri1

Trend 2: Africa’s transformative urban swell

In this report we continue our review of the five trends that we initially outlined almost a decade ago to be behind Africa’s enduring structural potential. Having recently published an update on Africa’s demographic (as well as institutional and income) potential (see here), we turn now to the advantages and risks inherent in the continent’s rapid urbanisation.

Quite clearly, Africa continues to urbanise at a rapid rate. Today it is estimated that 44% of Africa’s population is urbanised, up from 39% in 2010

This means that, since 2010, Africa’s total urban population has grown from 408m to 588m – a quite staggering 44% increase (and a rise of 180m people)

This is by some margin the largest urban swell that Africa has experienced in any ten-year period in its history. 

Today, Africa has 63 cities with populations of over 1m people – up from 49 in 2010 and 30 in 2000.

Looking ahead, between 2020 and 2050 Africa’s urban population is expected to increase by around 800m people. This means that, by 2050, 22% of the world’s urban residents are expected to be based in Africa, up from 14% today. 

Also, by 2050 it is expected that 11 economies on the continent will have urbanisation rates of over 80%; and a further 20 economies will have urbanisation rates of between 60% and 80%.

A range of clear economic and institutional advantages emerge as a result of this trend. Indeed, and as we discuss in this report, a rising body of research has added weight to the suggestion that rapid urbanisation in Africa is delivering some meaningful economic and institutional gains. 

Recent survey data shows that urban residents in Africa have substantially lower levels of ‘lived poverty’ than rural residents, as well as greater access to cash income; food; and medical care. 

Also, around half of Africa’s urban residents have a bank account, compared to around one-fifth of rural residents. And 41% of urban households own a computer, compared to 13% of rural households.  

Further, urbanisation, in tandem with sweeping demographic changes, continues to support the deepening of political participation across the continent. 

Urban, youth-led protest has delivered profound political change across Africa over the past decade.

However, the risks presented by Africa’s rapid urban growth are as compelling as the opportunities. 

We discuss five of these deep impediments in this report: (1) chronic infrastructure weaknesses; (2) poor urban planning; (3) the mushrooming of urban slums; (4) climate risks; and (5) political and socio-economic instability. 

Many of these challenges have become more pronounced over the past decade as rates of urban growth across the continent have not been met by commensurate improvements in urban planning and infrastructure; as well as in the context of limitations in the creation of new work opportunities for the continent’s urban youth. 

Further some of the most rapid urban growth on the continent is taking place in a way that amplifies ecological harm, and in areas that are particularly prone to the kinds of natural disasters that are, as a result of climate change, far more prevalent than before.

In sum, few areas represent the complex blend of opportunity and risk facing African economies as potently as the continent’s rapid urbanisation. 

We know that Africa’s towns and cities will continue to grow at a rapid rate, but we also know that not all the continent’s economies will be able to handle this swell effectively. 

To be sure, managing this dual risk and opportunity will be one of the most pressing and complex challenges for Africa’s leaders and policymakers in the decades to come. 

As such, the ability of certain countries to harness the clear potential of their urban nodes will be a key institutional and economic differentiator, particularly when considering the fiscal limitations that will be imposed as a result of the COVID-19 crisis, and the fluidity of new risks emerging as a result of climate change.

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Botswana Wants Angola’s Exiled Elephants to Return Home @business

Botswana may have found a solution to its elephant overpopulation: It’s going to encourage some of them to leave the country.

Botswana’s tourism industry, which accounts for a fifth of the economy, is heavily reliant on the world’s biggest elephant population, but the animals have become a political issue as there are too many of them and they destroy crops and occasionally trample villagers

Now, elephants are beginning to migrate into neighboring Angola and the governments of both countries are helping them do so by removing land mines left over from Angola’s civil war and tearing down fences.

“It’s the idea that we have, particularly looking at the overpopulation we have,” said Philda Kereng, Botswana’s environment minister, in an interview. “We have to help Angola understand the value of elephants.”

Botswana’s 135,000 elephants mostly live in a 520,000 square kilometer (201,000 square-mile) area known as the Kavango-Zambezi Transfrontier Conservation Area, which spans five countries and is home to almost half of the world’s African elephants. 

Angola’s elephants were pushed across the border by a decades-long civil war that ended in 2002. Illegal hunting elsewhere has also boosted Botswana’s elephant population.

Before the war, Angola had about 100,000 elephants, compared to less than 10,000 today, according to researchers

Most lived in the lush southeastern highlands, from which rivers feeding Botswana’s Okavango Delta wetlands originate.

“Southern Angola has prime elephant habitat, and, if conditions are safe for elephants, they will return to Angola in great numbers,” said Mike Chase, the founder and director of research non-profit Elephants Without Borders. 

“It is natural for elephants to leave areas where numbers are high and seek out areas with fewer elephants for uncrowded access to food and water.”

His organization has tagged almost 150 elephants with satellite tracking collars to map their movements in Botswana and neighboring countries. Chase said some are now returning to Angola.

“I am confident if afforded the right protection, elephant numbers in Angola’s conservation areas could increase quickly,” he said.

More funding is needed for the removal of barriers such as livestock fences, the protection of migration corridors and the education of local communities, said Tamar Ron, a wildlife ecologist who has acted as biodiversity consultant to the Angolan government, by email. 

Angola has allocated $60 million to remove land mines in the area.

“Angola needs to prepare for the expected migration and re-population of elephants and other wildlife into the country,” she said.

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Kenya Suspends Political Rallies After ‘Most Tragic’ Virus Month @bpolitics
Law & Politics

Kenyan President Uhuru Kenyatta suspended political rallies as part of measures to curb the coronavirus, after a surge in cases followed easing of restrictions in September.

The decision to suspend big political gatherings for 60 days comes as leaders jostle to mobilize supporters for a potential referendum next year, in which Kenya’s government could be restructured.

The East African nation has 58,587 confirmed coronavirus cases and 1,051 deaths as of Wednesday, according to the Health Ministry. Of these, about 15,000 new infections and 300 deaths were recorded in the past month alone.

“October has been recorded as the most tragic month in our fight against Covid,” Kenyatta said Wednesday in a televised address. “Now we are staring at a new wave of this pandemic.”

Kenya’s health managers have blamed the surge partly on politicians continuing to address crowded rallies without adhering to measure such as wearing of masks and social distancing.

Kenyatta also extended a nationwide curfew by an hour, to be observed from 10:00 p.m. to 4:00 a.m., while bars and restaurants are required to close by 9:00 p.m. The restrictions will be in place until Jan. 3.

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.@KeEquityBank targets regional role Suspending dividends has allowed chief executive James Mwangi to build a $100m war chest @FT
N.S.E Equities - Finance & Investment

The Nairobi office of James Mwangi offers a sense of the expansion plans harboured by the chief executive of Kenya’s Equity Bank. 

A string of flags — Kenya, Uganda, Rwanda, Tanzania, South Sudan and the Democratic Republic of Congo — adorn the entrance, highlighting his push to make the bank the region’s leading financial institution.

“We are now the largest bank in Democratic Republic of Congo, the largest bank in South Sudan, the second-largest bank in Kenya, when you go to Rwanda we are ranked number four and Uganda we are number six,” he says.

“I have no doubt we will be the second-largest bank in Rwanda by next year, and probably the third-largest in Uganda. So essentially, we have made Nairobi the region’s hub.”

This growth has come in less than a decade, turning Equity Bank into one of the largest financial companies by market capitalisation in east and central Africa. 

“It is an expansion that has a significant impact on the ground,” Mr Mwangi says.

Talks to acquire four country divisions of Atlas Mara — the pan-African banking group founded by former Barclays chief executive Bob Diamond — collapsed in June. 

But two months later, Equity Bank concluded the purchase of a majority stake in the Banque Commerciale Du Congo (BCDC), the oldest bank in the DRC, for $95m. 

Equity Group now has two subsidiaries in the DRC having earlier acquired ProCredit, a German bank.

Equity is the second-biggest bank in Kenya after KCB, which has also expanded abroad, but analysts see Mr Mwangi as more aggressive in his overseas push. 

“Going to DRC, which is a French-speaking country, is a good test of how we could perform in French[-speaking] regions like [in] west Africa,” Mr Mwangi says.

The acquisition of BCDC would “allow Equity Bank to achieve scale by consolidating with its previously held subsidiary in [DR] Congo”, says Edwin Chui, head of research at Dyer and Blair Investment Bank in Nairobi. 

“[DR] Congo is a high growth market in terms of banking because the penetration is low.”

Only 23 per cent of the African population have bank accounts

Equity, which is 12.5 per cent owned by the Norwegian Investment Fund for Developing Countries (Norfund), also has a licence to operate a representative office in Ethiopia. 

The country of more than 110m people is mainly closed to foreign banks — Equity’s licence there allows it to offer finance trade facilities, but little else.

“We have chosen volume, and volume can be achieved by the 1.2bn people in Africa,” Mr Mwangi says. “Only 23 per cent of the African population have bank accounts.”

He says his target is 100m African customers by 2025, up from 14m now. 

“But it’s not just the numbers of customers, we are now talking [about] a balance sheet of nearly $9bn. Hopefully by the end of this year we will breach $10bn,” he adds. At the end of June, the balance sheet stood at $6.85bn.

When Mr Mwangi joined as Equity Bank’s finance director in 1991, he says the bank was “technically insolvent” and rated “number 66 of 66 financial service providers” in Kenya, with a balance sheet in the region of $300,000. 

Equity’s recovery has included catering to the “unbanked” poor — providing small loans and microfinancing, among other services. 

“We are an enabler, we are a catalyst. We give mortgages, we give all kinds of loans. We bank everybody starting with refugees, to social payment beneficiaries,” he says.

Equity Bank’s loans range in value from as high as $450m to as low as $5. 

However, an August report from credit rating agency Moody’s said that over the next 12-18 months it expected Kenyan banks to continue “to have a high percentage of [loan] impairments”. 

The report noted that impairments at the country’s banks “increased to around 3.7 per cent of net loans during the first half, from 0.9 per cent in the first half of 2019”.

For the first time in 16 years, Equity said it would withhold dividends this year until the pandemic eases, “to ensure we could safely ride the storm of uncertainty”.

Mr Mwangi believes this would allow the bank to retain $100m for further acquisitions, in order to then “become truly a regionally spread investment”. 

This, he adds, would lead Equity Bank to earn 40 per cent of its revenue outside its Kenyan home market within the next two years, up from 25 per cent last year.

Deepak Dave, of Riverside Capital Advisory in Nairobi, who advises banks and development finance institutions on the banking sector, strikes a note of caution about Mr Mwangi’s expansion plans.

“Equity is now stepping out into the bigger region outside their home market. They’re [expanding out of] the spot they dominate, and that can be a much trickier proposition. They’re taking over reasonably well-sized banks in a region where intraregional banking has never been anybody’s strong suit,” he says.

Mr Mwangi shrugs off such concerns: “We think that national boundaries are artificial boundaries, the needs of the people in Africa are the same, the economies are at the same level of development so, essentially, it will be naive to allow yourselves to be constrained by national boundaries.”

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.@KeEquityBank share price data
N.S.E Equities - Finance & Investment

Par Value:                  0.50/-

Closing Price:           32.75

Total Shares Issued:          3773674802.00

Market Capitalization:        123,587,849,766

EPS:             5.93

PE:                 5.523

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by Aly Khan Satchu (www.rich.co.ke)
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November 2020

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