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Recent Topicals

Performance by Retirement Benefits Schemes in Kenya

Mar 10, 2019

The Retirement Benefits Industry plays a huge role in the economy. According to the Organization for Economic Co-operation and Development (OECD) in 2017, assets in Retirement Benefits Schemes totaled 50.7% of GDP in the OECD countries and 19.7% of total GDP in the non-OECD jurisdictions. It is clear that most non-OECD countries still have a long way to go in the growth of the sector. In Kenya, the Retirement Benefits Assets as a percentage of GDP stood at 13.4%, compared to more developed markets like the USA at 84.1% and the UK at 105.3%. Over the last decades, we have seen reforms and education initiatives by the Retirement Benefits Authority (RBA) to educate people on the importance of saving for retirement. The industry has registered great growth from both member contribution and good performances leading to the assets under management growing to Kshs 1,166.6 bn in 2018, from Kshs 287.7 bn 10-years ago, which is a compound annual growth rate of 14.3% over the 10-years.

Nyeri Real Estate Investment Opportunity, 2019

Feb 24, 2019

In line with our regional coverage strategy, we continue to carry out research on various markets in Kenya, with our focus areas being in counties such as Nakuru, Mombasa, Kisumu, Laikipia, Meru, Nyeri and Uasin Gishu. The exercise is aimed at identifying the best real estate investment opportunities for our investors outside Nairobi. In January 2018, we published the Nyeri Investment Opportunity 2017, highlighting that the area recorded an average rental yield and capital appreciation of 8.8% and 17.3%, respectively. This week, we update our findings on the Nyeri real estate market, having collected and analy...

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...