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THE MARKET WHISPERER: Gated farms gain traction with owners in Kenya

Saturday October 22 2016
tomatoes

Companies are offering investors a chance to own parcels of farming land in a gated community. PHOTO | FILE

THE PRIVATE sector in Kenya is coming up with initiatives that seek to make land acquisition and farming as hands-free as possible, in a bid to attract more young people to the sector and thus tackle unemployment.

Newspapers have been carrying how-to sections about how good agricultural practices invariably yield a decent return while input suppliers have been rolling out integrated solutions. The efforts, focused largely on non-rain fed and space-conscious farming, have however failed to address the challenge of managing small, fragmented parcels of land.

Land sellers have now come in to fill the void by selling land with a contract to manage the parcels for the buyer. Loaded on the contract is a guaranteed annual return on the parcels, some as small as 0.05 hectares, which are run collectively.

Last week, some 40 farmers were handed $120,000 by the Property Reality Company, an end-to-end farm runner. “There has not been much agribusiness due to the stress that comes with farm management,” said PRC general manager Abraham Muriithi when the company issued the cheques to the farmers. He said lack of management had forced many buyers to keep their land idle in anticipation of capital gains.

Farmers who participated in PRC’s initial phase last year put in $3,500 for the parcel and were to get $2,400 from the produce annually. The cheques they received last week were for the harvest of mainly tomatoes and capsicum during the first half of the year.

PRC has partnered with an Israeli firm for market support during bumper harvests. Since PRC pioneered the concept, other companies have taken it up, including Diamond Property Merchants, which is promising $5,000 per year from an initial investment of $7,000.

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The concept has also been extended to forestry by Greenpot Enterprises, which is inviting investors to own portions in a gated community of forests focused on bamboo farming, beekeeping and tourism. Greenpot is offering options of buying a two-acre parcel of land for $10,200 and leasing five acres at $14,000 or 10 acres at $26,000.

The returns should start streaming in after five years and are projected at between $12,000 and $45,000 at the minimum. The investment horizon is tied to the productive lifespan of bamboo, which is between 29 years and 40 years.

While the solutions are promising, some kind of regulation may eventually be required to ensure their sustainability and protect investors.

Uganda miners get Fairtrade certification

UGANDA’S SYANYONJA Artisan Miners Association has been certified by the Fairtrade Organisation, giving gold mined by the co-operative better prospects in the global market.

Syanjonya becomes the first artisanal mining group to be certified by Fairtrade in Africa. This sets the stage for eight other informal groups from Migori in Kenya, Busia in Uganda and Geita in Tanzania, who employ crude technology to mine gold from a rich seam around Lake Victoria, to be certified under a pilot started in 2013.

The certification follows training of Syanyonja members in entrepreneurship, safety, handling of mercury and industrial relations. Syanyonja joins the Macdesa, Aurelsa and Sotrim gold mines in Peru in being certified by Fairtrade.

Syanyonja produces five kilogrammes of gold in a year which, through Fairtrade, will be refined and sold to jewellers in the UK and other markets. The certification obligates Syanyonja to respect human rights and ensure the minerals are not conflict-sourced.

The pilot is now seeking to enable mining groups to get affordable credit and gain gradual integration into the fair trade market. Without it, the group’s raw minerals will be shut out from more than 880,000 buyers of gold, tantalum, tin and tungsten who under various protocols will from next year be required to keep blood minerals out of their value chains.

Moroccan bank Attijariwafa to buy 77.19pc stake in Rwanda’s Cogebanque
MOROCCO’S ATTIJARIWAFA Bank is to acquire a controlling stake in Cogebanque, a Rwandan lender owned by the Catholic Church, for $41 million. Attijariwafa Bank, owned by the Moroccan monarch, intends to focus on big ticket projects.

Officials of the two banks signed an MoU for the purchase of the 76.19 per cent stake this past week. The deal was sealed in the run-up to last week’s visit by Morocco King Mohammed VI to Rwanda, Tanzania and Ethiopia.

Morocco is looking south for diplomatic and trade ties with sub-Saharan Africa as it looks to rejoin the African Union. Morocco’s’ Cooper Pharma laboratories has also entered into an agreement with the Rwanda Development Board for the construction of a pharmaceutical plant that will be operational from 2019.

West Africa becomes leading hub of Islamic banking in the continent

WEST AFRICA has become the leading hub of Islamic banking in the continent after the regional stock exchange became the first in the continent to list Sukuk bonds.

Last week, BRVM — the regional bourse for eight West Africa countries — listed five bonds worth $1.3 billion issued by Cote d'Ivoire, Senegal and Togo.

The listings, which came on the sidelines of the Forum on Islamic Finance in Africa held in Abidjan are expected to enhance the liquidity of Islamic bonds in the West African Economic and Monetary Union, giving members (the other five are Benin, Burkina Faso, Guinea-Bissau, Mali and Niger) and private companies more options for raising capital.

Botswana bourse floats valuation tender in readiness for demutualisation

THE BOTSWANA Stock Exchange has once again floated a tender for valuing the business in readiness for the sale of its shares to the public.

The invitation of interest in preparation for demutualisation of the bourse — which is the separation of ownership from management — follows a law passed last year to enhance governance and competitiveness of the exchange.

It is in line with a global trend that has seen bourses move from being controlled by market players to ownership by a broad range of interests.

The Nairobi and Dar es Salaam bourses have demutualised while the Kampala Securities Exchange plans to do so. The valuers are expected to be corporate entities that have undertaken at least one such assignment and will be given the terms of reference upon payment of 300 pula ($27). The offer closes on November 25.

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