UK Firms Ship Out Sh20bn in Dividends and Fees From Kenya

Nairobi Securities Exchange trading floor. Kenyan firms have become money minting machines for British interests. FILE Nation Media Group

UK companies with significant stakes in Kenya’s listed firms are taking home more than Sh20 billion in dividends and fees this year, underlining the former colonial master’s continued dominance in the economy.

Financial results so far released for the six companies with large British ownership show that the foreign owners will take home Sh20.3 billion of the total Sh38.6 billion declared in dividends and fees due to shareholders.

Telecoms operator Safaricom tops the list of Kenyan firms that have become money minting machines for British interests with its Sh7.2 billion dividend and fees payout for past financial year.

British owners of Barclays Bank of Kenya with a 68.5 per cent stake are second on the list with Sh3.72 billion followed by their counterparts at Diageo and associates who have earned Sh3.46 billion for a 50.03 per cent stake in brewer EABL.

UK interests in Standard Chartered Bank close the list of top foreign shareholders, who have reaped billions from their investments in Kenya taking home Sh2.85 billion for the 73.89 per cent stake in the lender.

These earnings compare poorly with the Sh16 billion that Kenyans will get for their investment in the same companies.

Vodafone with a 40 per cent stake in Safaricom is walking away with Sh4.96 billion in dividends declared by the telecoms operator besides the Sh2.3 billion it has earned in licence fees for the M-Pesa platform.

The UK owners have a 60 per cent stake at BAT, while at Equity Bank, a UK-based private equity firm Helios has 24.45 per cent shareholding.

Keen followers of Kenya’s economy say the UK’s dominance of profit repatriation from local public companies has more than compensated the colonial master for loss of government contracts in the past 10 years.

Britain has been one of the major casualties of former President Kibaki’s dalliance with the Chinese in the past 10 years.

UK firms lost the stranglehold they have had on major contracts in key sectors such as road construction and supply of motor vehicles to the government.

The UK also maintains extensive interests in private Kenyan companies including security printing monopoly De la Rue that earns billions of shillings in currency printing contracts every year.

High level British investments in Kenya is being seen as the reason the UK has made an about-turn in its diplomatic stance since Uhuru Kenyatta took charge of East Africa’s largest economy.

Mr Kenyatta has been indicted by the Hague-based International Criminal Court (ICC) for his alleged participation in the violence that followed the 2007 election leaving 1,300 people dead and more than 300,000 families displaced.

British High Commissioner Christian Turner took a hard stance against an Uhuru administration in the run up to the March 4 election, saying he would have “essential contacts” with him if elected.

President Kenyatta has since visited the UK and met senior British government officials in a move seen as prompted by the mutual interests of the two countries.

It remains to be seen how the two governments will manage their frosty relations but analysts expect economic interests to take precedence over other considerations.

Macharia Munene, a professor of international relations at United States International University (USIU) in Nairobi reckons that while Mr Kenyatta has asked for respect and reciprocity from foreign partners, he will also have to keep an eye on Kenya’s economic interest.

“Investments make it difficult to break diplomatic relations or even impose sanctions on some countries. Trade is also an issue and Kenya has its own interests in this,” said Prof Munene.

An analyst with an investment bank in Nairobi, who declined to be named due to his engagements with UK-based foreign investors, said the huge amount of cash being repatriated is an indication that the British colonial legacy is not just political but also economic.

This meant that economic and political interests would take precedence over issues such as the ICC indictments.

“Dividends payouts to UK firms or individuals are still significant even in relation to the total profitability of listed firms,” he said. British companies have traditionally dominated the NSE-listed firms having been initially driven to market by fear of nationalisation at independence.

Our source said this is the reason some small and medium sized companies with British origins listed on the NSE despite the high costs of the exercise.

“There is always the possibility of the government making laws or adopting policies that are hostile to foreign firms even if they do not break diplomatic relations. Kenya also has significant trade and investment relations with the UK and Europe making the need to maintain good relations mutual,” Former Finance minister Njeru Githae pressed this point home late last year quipping that there would be no need to have any contacts that were not essential with the British.

“As far as we know, any contacts with the British are essential,” Mr Githae said.