Possible explanation on why Safaricom Merchant Transaction Charges Differ

Possible explanation on why Safaricom Merchant Transaction Charges Differ

I cannot speak on behalf of the company but I think there are reasonable explanations as to why merchants negotiate different terms with the mobile operator and as to why they cannot operate a free service. To begin with, to my understanding, although Safaricom provides financial services, by itself it cannot operate like a bank. This means it cannot be able to lend against customer deposits. According to the current regulations, Central Bank of Kenya requires that all mobile money operators instead collaborate with a commercial bank and to hold in an escrow account in their partner bank sufficient funds to cover all of the electronic money which they have sold to their customers. Therefore mobile money operators cannot themselves intermediate the funds they have mobilized from their customers; they must instead transfer these funds to a commercial bank which is as well subject to all the normal prudential regulations applicable to deposit taking institutions. This was done so as to protect consumers so that even if tomorrow a mobile money operator were to collapse, the electronic money held by its customers could be reimbursed from the escrow account in the partner commercial bank and you would still get your money back...
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What Bank of Japan is Doing to Promote Financial Education

Extract from Dept Governor Iwata’s speech Changes in financial behavior and challenges presented by the aging population and declining birthrate The need for improved financial literacy is gradually taking hold in Japan. In the council’s survey, we ask about the “purpose of holding financial assets.” The reply chosen most often had long been “preparation for illness and unexpected emergency.” But in 2013, this changed for the first time in its 60-year history to “funds for life during my retirement period.” This is symbolic for Japan, which has a well-developed public pension system. The financial behavior of Japanese people has changed accordingly. Households’ financial assets 1 have increased by around 20 percent over the last decade; that is, the period before and after the global financial crisis. Notably, the amount held by people aged 60 years and older has reached 25 million yen per household. This is almost the same level as the “target amount of funds you regard as necessary” in the survey. Financial assets are being accumulated to ensure a stable living standard over an individual’s retirement period. However, there are worrisome signs that financial literacy associated with lifetime planning has been undermined. As I mentioned earlier, households’ financial...
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Local and International Markets Round-up

Local and International Markets Round-up

Oil Oil has been falling since December and posted lows of $44.20 before rebounding higher and at the time of writing it was trading at $46.67.  Overall sentiment is still bearish with a number of investment banks revising their forecasts to around $40. The down move in oil prices have mainly been caused by unconventional oil supply against the backdrop of slower growth of global demand. According to BOC, a barrel of shale oil costs between $40 and $80 to extract, depending on the project but then noted that this is mainly a reflection of the upfront cost of investment and exploration, rather than the continuing cost of keeping oil flowing from existing installations which are much lower. Therefore those factors coupled with hedges and improvement in production efficiency may dampen chances of oil recovery in the medium-term. From a technical perspective, I think we may see more range trading in the short-term. I still prefer selling into rallies until underlying fundamentals change and would rather wait for a rally higher before selling into it. We may see prices dip below $40. One major factor to monitor going forward is developments in Iran. Sanctions might be lifted into March which...
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Case for Under-performance of Gold as an Asset 2015

Case for Under-performance of Gold as an Asset 2015

I contend that gold is going to continue exhibiting weakness against the dollar in value for much of 2015 and the downtrend will likely be a self-reinforcing process. Weakening of gold prices could lead to further reduction of speculative gold long positions and may lead to less demand for the metal from the traditional sources of demand further rein-forcing current downtrend. Soros was right when he noted that gold has been losing its status as a safe haven after it failed to rally even when the Euro was on the verge of collapse and fed was still aggressively buying bonds. I shall try to explain why the trend has been so. Prices in the market operate like an auction process. Commodity prices are influenced by supply and demand forces. When demand exceeds supply, prices rise and when supply exceeds demand, prices tend to fall. It is not always that straight forward, disequilibrium exists and prices do not have to necessarily reflect prevailing fundamentals. These price movements tend to have notable effects on the demand and supply constraints in the gold market. Gold rose from around $457 in 2005 to a peak of circa $1921 at around 2011 and this has not...
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Shares undervalued on PE basis had a good performance 2014

Listed PE data compilations 2013 December for Nairobi Securities Exchange stocks. This data stands out as empirical evidence that buying undervalued companies is a worthwhile and well paying strategy. If you had avoided state owned companies and bought companies with PE valuations of below 12, your portfolio would have generally performed well. Some of the shares rallied by more than triple in value. The insurance companies did well and were noticeably way undervalued. Current P= Current price at the time of compilation PE = Price Earnings ratio EPS =Earnings Per Share PE2013 = PE as of December 2013                           AGRICULTURAL SECTOR COMPANY EPS2012 PE2013 EPS2013 Current P REA VIPINGO 7.79 4.337539 6.34 27.5 SASINI 1.72 -49.16667 -0.3 14.75 UNGA LTD 1.94 5.294118 3.57 18.90 KAPCHORUA TEA 19.93 2.72094 45.94 125 KAKUZI 28.06 4.883721 19.35 94.5 LIMURU TEA 33.74 5.892058 84.86 500 EAAGADS 4.46 18.56618 1.36 25.25 WILLIAMSON TEA 93.74 2.246715 94.36 212                COMMERCIAL AND SERVICES EXPRESS LTD 0.37 23.23529 0.17 3.95 KENYA AIRWAYS 3.58 -2.055118 -6.35 13.05 NATION MEDIA GROUP 12.7 19.62264 15.9 312 STANDARD GROUP 2.69 10.74219 2.56 27.5 TPS EASTERN AFRICA(SERENA) 4.51 12.29167 3.6 44.25 SCAN GROUP 2.55 26.0181 2.21 57.5 UCHUMI 1.03 15.18519 1.35 20.5 HUTCHINGS BIEMER...
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Markets Round-Up

Markets Round-Up

Since the global financial crisis, we did see a synchronized response by central banks across the world by loosening monetary policy to cushion the world against a probable devastating collapse. The accommodative policies adopted have succeeded in protecting the world from a protracted recession that would have aggravated the then prevailing situation. However, the pace and extent of recovery has turned out to be uneven and resulted in diverging policies across the world. On the upside, this creates great and clearer investment opportunities in the markets across the markets going forward. Oil Drop in oil prices will be a significant boost for consumers and net oil importer countries. As at the time of writing, crude oil is trading at $61.59 and Brent at $65.04. Crude oil bounced off psychological support level just slightly above $60.  The down move has been due to a combination of factors such as, slow growth in major economies such as China, Europe and Japan, increase in supply due to US shale oil production, unwinding of long oil speculative positions etc. US is supposed to debate on whether they should lift the export ban which will provide a wider market for the shale oil as well...
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All Berkshire Hathaway Annual Shareholder Letters Combined

All Berkshire Hathaway Annual Shareholder Letters Combined

Warren Buffet has slowly risen back to become the second richest man on the planet,businesses he bought are making record profits. Warren Buffett is legendary as an investor, but he’s also an incredibly successful businessperson, too-a fact that sometimes gets lost in the millions of words that have been written about his advice on how to buy a stock. I downloaded all of the Berkshre Hathaway upto 2012 BRK annual shareholder letters, turned them into a PDF, and combined them. I think it could be useful if you want to search through all of the letters at once to see if WB ever wrote about a certain company/topic. Enjoy reading about happenings in corporate America, and trying to predict where things will land in the future. Anyways, here is the file: Click to download In addition here is the 2013 pdf:Click to download To get all the letters separately here is the source BRK official website Good luck and enjoy Here are some of my favorite lessons from his annual letters to Berkshire Hathaway (BRK-A) shareholders: 1.Keep calm in the face of volatility. Buffett writes that earnings gyrations “don’t bother us in the least.” After all, “Charlie and I would...
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