Why NCBA is on sale after Safaricom

It’s a fascinating question: Should you sell the fattest cow or the thinnest? The conventional wisdom is the thinnest; it could die. But why not fatten it before selling and get a better price later?  

While fattening the thin one, why not sell the fat one? Is that the philosophy behind the Kenya Pipeline Company’s Initial Public Offering and the sale of Safaricom’s 15 per cent stake?

Few buyers are willing to buy a thin cow to fatten. Some do, if they know the cause of thinness and have fodder or medication.

At times, even the fat cows might not be fat enough, and some buyers know there is a possibility to make them even fatter. Remember leveraged buyout? Hostile takeovers? 

In Kenya, I have heard that if we started by selling the thin cows, the fat ones would be made thin very quickly!

By the way, I grazed cows when growing up in the White Highlands; you are free to replace a cow with a domestic animal of your choice.

The sale of Safaricom is more about the government wanting to get money from a fat cow. Have we thought of the possibility that the buyer of the cow could slaughter it? 

What about the NCBA bank? It’s one of the leading banks in Kenya, after the merger of NIC and CBA banks. Selling a fat cow again?  Clearly, Kenya is a leader in financial services, going by the number of innovations, the number of banks with branches outside Kenya, and the level of sophistication. 

The buyers most likely see this potential, and maybe better than us. They can fatten the cow further after buying it.

They have fodder; the networks and global reach.

The South African (SA)banks have been in Kenya for over 100 years. It’s the sophistication of SA banks that made life hard for M-Pesa in the country. What will SA banks do with M-Pesa?

Remember the dream of Cecil Rhodes? Are South Africans actualising it? Remember the Boers in Kenya? Are South African banks succeeding where other sectors failed? Remember Castle Brewery? Shoprite?

The argument is that Nedbank, the buyer of NCBA, wants a footprint in the East African region. They can smell the coffee. Absa Bank has done very well in Kenya, better than Barclays. Is Nedbank following in the footsteps?

Absa stands for Amalgamated Bank of South Africa. Did I hear Absa wants to buy another lender in Kenya?

It gets more interesting; is there a connection, no matter how tangential, between Safaricom and NCBA’s sale to SA-based entities? If Safaricom and NCBA’s sale goes through, South Africa will control a big chunk of Kenya’s financial market, including M-Pesa.

Why the insistence from many quarters that both Safaricom and NCBA will retain their Kenyan identity and control?

That is curious considering who the majority shareholder shall be in both cases. Are we trying to soothe economic nationalists? 

Conspiracy theorists are overworking, asking why we are so easily bought by SA-based firms.

Maybe we need to know the shareholders of Vodacom and Nedbank? Could there be some Kenyans? Will Kenya’s financial market be controlled remotely or through proxies? Am I overthinking? 

The NCBA sale is surprising. Maybe the owners felt it’s time to do something else. Sell it and diversify. After all, the bank is mature now, or is it a fat cow too?

Did I hear a once first family has a key stake in NCBA? Do you recall another bank with links to another first family sold to Nigerians? A pattern is emerging.  

Without an insider’s information, we can only speculate. By selling to a foreign-owned bank, it’s possible that NCBA owners are protecting their wealth from an “invisible hand” or “a ghost.”

Who or what is the invisible hand or ghost? Help me answer that question soberly and placidly. 

Why are the banks or Safaricom not selling to European, Chinese or US entities? Why SA or Nigeria?

Financial decision

The sale of Kenyan economic firstborns, telcos and banks is more than just an economic or financial decision.

There could be some political life wires. In fullness of time, some inconvenient truth will emerge. I hope my speculation will be vindicated.

It’s not just banks on sale; a leading logistics firm was sold to a Turkish buyer.

What else has been sold lately? Any SMEs? Private companies?

We have a lively debate in Kenya on the sale of telcos and banks.

What are we buying abroad? Why are our purchases not hitting headlines?

The debate elicits an important question: who are the current economic owners of Kenya? We know the political owners.

How is this ownership likely to change in the next 10 years? To whose favour? How will the new ownership affect economic growth and to whose favour?

Finally, there was a rumour last year over the sale of NCBA. It came to pass.

I have learnt to take rumours in Nairobi seriously! The number of political and economic players in it is too high and concentrated to keep a secret. Any economic rumour to share?