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Recent Topicals

Fintech Impact on Kenya’s Financial Services Industry

Feb 17, 2019

Technological disruptions have greatly affected the Kenyan financial services industry in recent years. Mobile money is by far the most significant, as underlined by data from the Central Bank of Kenya (CBK), which indicates that the value of mobile transactions has grown at a CAGR of 66.3% since inception in 2007, from Kshs 14.8 bn of transaction volume, to Kshs 4.0 tn of transaction volume in 2017. Online banking has also gained traction and majority of banks are now aligning their business models to towards online channels as opposed to the traditional brick and mortar. The most recent innovation to shake up the industry is digital lending, which has been, to some part, a response to the slow growth in private sector credit following the capping of interest rates on loans offered by banks. Globally, decentralization of currency has been a topic of interest, pegging the question on whether these emerging digital currencies have a place in the industry. Financial services b...

Consolidation in Kenya’s Banking Sector to Continue

Feb 10, 2019

Over the last 8-years, there has been various consolidation activities in the banking sector, as banks either acquire smaller banks or merge and form strategic partnerships with other banks to form relatively larger companies. Consolidation activity has picked up in the recent past as smaller banks that have struggled to operate under the interest rate cap regime are acquired by their larger counterparts, while some of the banks have been forming strategic partnerships. Some of the consolidation activity has also been driven by remediation of collapsed banks that had been under receivership, such as Imperial  Bank Ltd, and Chase Bank Ltd. 2 deals are already in the pipeline in 2019, with Commercial Bank of Africa (CBA) issuing a cash buy-out offer of Kshs 1.4 bn to Jamii Bora Bank as analyzed in our CBA Acquisition Note, and CBA and NIC Group issuing a merger notice as analyzed in our NIC-CBA Merger Note

Karen Investment Opportunity - 2019

Jan 27, 2019

Following the successful completion and handover of “Amara Ridge”, Cytonn’s flagship project located in Karen near the Bomas of Kenya, Cytonn Real Estate has now launched “Applewood”, a signature gated community development comprising of 18 luxury homes in Miotoni, Karen, seated on 10.4-acres. In this week’s topical, we update our research findings on the Karen real estate market by looking at the factors that have contributed to its attractiveness to investors and analyzing the potential returns to investors in the area. We have expanded our coverage of Karen’s real estate performance by also looking at the commercial office and retail sectors. From Cytonn Research conducted in December 2018, the average total returns in the Karen residential market came...

Sub-Saharan Africa (SSA) Eurobonds: 2018 Performance and Effects on Debt Sustainability

Jan 20, 2019

Africa has increased its appetite for foreign debt in recent times with the latest issues being by the Republic of Nigeria, which issued three debt instruments in November 2018. The increased affinity for foreign currency-denominated debt by African nations is driven by: Reduced financial aid to African countries by Western donor nations, The need to finance heavy infrastructure projects, Covering for budget deficits, and Financing of maturing debt obligations. This note analyses SSA’s Eurobond performance in the year 2018 with the aim of painting a picture of the investor confidence and risk tolerance, and an outlook on yield performance for the year 2019. The analysis will be broken down as follows: Background of Eurobonds in Sub Saharan Africa, Eurobond Performance in Sub-Saharan Africa, Debt Sustainability in Africa: Case Study of Mozambique Debt Crisis,...

Real Estate Outlook

Jan 13, 2019

In 2018, the real estate sector recorded continued investment across all themes driven by; Political stability following the conclusion of the electioneering period in Q4’2017, hence increased activity across the sector, The continued positioning of Nairobi as a regional hub that has led to increased entry of multinationals creating demand for residential units, retail space, commercial offices and hospitality spaces, Kicking off of the affordable housing initiative as part of the Kenyan Government’s Big 4 Agenda, which has gained momentum with the launching of projects such as the Pangani Estate in Nairobi, and, An improving macroeconomic environment, with the country’s GDP growing by 6.0% in Q3’2018, higher than the 4.7% recorded in Q3’2017. In terms of performance, however, the sector recorded an average total return of 11.2% in 2018, 2.9% points declin...