British companies ship out Sh25bn in 2014 dividends

Money Markets

British companies booked nearly Sh25 billion in dividend and fee payouts from listed Kenyan associates in 2014. PHOTO | FILE |  NATION MEDIA GROUP

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

In Summary

• The 2014’s Sh24.6 billion dividend payout to UK companies represents a 28 per cent increase on the Sh19 billion they shipped out in the 2013 financial year.

British companies booked nearly Sh25 billion in dividend and fee payouts from listed Kenyan associates in 2014, even as the two countries continue to manage delicate diplomatic relations made difficult by 2013’s ascension to power of President Uhuru Kenyatta while facing trial at the International Criminal Court (ICC). 

The huge earnings by the UK firms, which retain a sizeable grip on the Kenyan economy, have also come despite the steady fall in trade between the two countries.

Kenyan imports from her former colonial master in 2014 fell to the lowest level in seven years to Sh47 billion from Sh49 billion in 2013, according to data from the Kenya National Bureau of Statistics.

The volume of Kenyan exports to the UK also dropped for the third year in a row, standing at Sh35.3 billion in 2014 from Sh37.1 billion a year earlier.

Britain’s trading fortunes have continued to decline as Kenya pursues a ‘look east’ policy that began under former President Mwai Kibaki with India, China, and Japan as the main beneficiaries.

Tellingly, Mr Kenyatta is yet to visit London on an official engagement with the UK since coming to power two years ago. His two visits to the UK in 2013 and 2014 were to attend a conference on Somalia and to support First lady Margaret Kenyatta in the London Marathon respectively.

UK investors in Kenya have, however, had no reason to complain as far as doing business with East Africa’s largest economy is concerned. In fact, the UK has maintained its stranglehold on the Kenyan economy with the presence of some of its biggest companies in key sectors.

British companies Vodafone, Diageo, Barclays, BAT, Standard Chartered and private equity firm Helios hold significant stakes in some of the biggest companies listed at the Nairobi Securities Exchange (NSE), placing them in pole positions when it comes to the sharing of dividends.

The 2014’s Sh24.6 billion dividend payout to UK companies represents a 28 per cent increase on the Sh19 billion they shipped out in the 2013 financial year.

Besides, the 2014 payout was more than half of the total Sh45 billion dividends and fees paid out by the 12 companies with majority British ownership at the NSE.

Vodafone Group, whose earnings from dividends and M-Pesa fees from Safaricom surpassed Sh10 billion for the year ending March 2014, topped the list of firms that were rewarded handsomely.

Vodafone earned Sh7.5 billion in dividends for its 40 per cent stake in Safaricom, plus an estimated Sh2.9 billion in M-Pesa fees.

The UK company earned a combined Sh7.3 billion in 2013 from dividends and fees. The increase in Vodafone’s 2014 take-home came from the rise in Safaricom’s dividend payout to Sh0.47 a share (compared to 2013’s Sh0.31) and the rise in Safaricom’s M-Pesa revenue from Sh21.8 billion in 2013 to Sh26.56 billion in the year ending March 2014.

M-Pesa platform

Vodafone Sales and Services Ltd (VSSL) owns proprietary rights over the M-Pesa platform and earns royalties accrued from use of the mobile money transfer solution. The fee is estimated at 11 per cent of total M-Pesa revenues.