African Investor Relations

This notice appeared from Pioneer Africa in the Zimbabwean press today – see below. Here are a few observations:-

- THE ANNUAL REPORT IS NOT ONLINE AS AT THE DATE OF THIS ANNOUNCEMENT – IT IS ONLY THE ABRIDGED ANNUAL REPORT THAT IS – NO PROXY VOTING MATERIAL EITHER – a few more days and shareholders will be able to claim that proper notice was not given

- This notice obviously has the sanction of the ZSE but no mention is made of this

- The notice in the hardcopy press advert does not appear on the website

- There is no mention of why the annual report was not sent – presumably because the company can’t afford it?

- There is no explanation of the threshold of shareholder votes required to approve the waiver of the receipt of the hardcopy annual report – is it 75% of the votes (in which case a majority shareholder could unilaterally deny minority shareholders) or 75% of the shareholders by number? Or 75% of the number or votes in attendance at the meeting – usually the quorum at an AGM is just a few shareholders

- is putting the annual report on the website enough? Do Directors have an obligation in terms of good corporate governance to make available to shareholders the annual report?

- proxy forms are available at the Head office but not on the website – shareholders have to collect these forms and then forward them to the Company Secretary – if the annual report can be put online why not the shareholder proxy forms? The shareholders that are asked to waive their right to receive hardcopy annual reports

- are the directors reasonably sure that all of their shareholders have a reasonable chance of receiving their shareholder voting material? How can a shareholder vote on something if the voting material is not sent to them. Surely the logical thing to do, assuming that this initiative is legal, is to send all of the hardcopy announcements of the company’s intention to be carried out in the following year.

- How many contact email addresses does Pioneer Africa have of its shareholders? What initiatives has it taken to ensure that the voting material – the stuff that all shareholders are entitled to – is sent to shareholders?

- There is no corporate governance section on the Pioneer Africa website. The 2008 annual report (since the 2009 one is not online) says that the Board endorses the King II Code of corporate governance……mmmmmm…..

- S149 of the Companies Act requires that the balance sheet etc. “be sent to all persons entitled to receive notices” – the penalty if this is not done? s149 (3) of the act says ” If default is made in complying with subsection 1 the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding one hundred dollars……….gasp.

- so why havent other companies done this previously?

- which is more or less excusable? Denying the shareholders a reasonable right to receive their voting material or denying them the right to receive the annual report?

- forgetting the bigger picture issue here – if the annual report does not get published in the next day or so the clear 21 day notice period will have been breached – so what? You may ask.

This is a good example of the ignorance of directors when it comes to their obligations associated with shareholder communications. The IOD Zimbabwe and other institutions have high-flying-fluffy-puffy corporate events and training sessions where the oft-stated cliches of progressive corporate governance etc are stated over and over again to a sleeping audience. There should be hands on practical training sessions showing how executives can use the web effectively to communicate with shareholders, interactive sessions with legislators to come up with ways of solving the issues facing Zimbabwe

I hope this does not set a dangerous trend. Pioneer Africa is not a Safaricom and does not have the ability to significantly influence the regulators in turning a blind eye to corporate governance principles that have evolved from the South Sea Bubble days.

Dominic Jones , a world leader in online investor relations, has this opinion about the trends in African markets regarding de-linking the direct communications channel with shareholders:

“Scrapping requirements for companies to mail printed disclosure documents to investors is a global trend, but it has exacerbated shareholder apathy in every jurisdiction where it has been implemented. This is largely because regulators have failed to replace printed disclosures with suitable standards of online disclosures. Apathy and an uniformed investing public is, to my mind, the single worst thing that can happen in any market. It ultimately will lead to market abuses.”

Globally intellectual debate about the end of “shareholder value maximisation” has come to the fore. A recent article in the Economist highlights that “stakeholder values” are emerging as the core objectives of management.

Continue Reading

Well run banks are profitable and may enjoy a very strong investment story given their critical role in the economy. Banks are a favourite amongst investors of all types: they are easy to understand (theoretically) brand awareness is high and they are profitable. They are also highly regulated which adds confidence to the general investing populous.

Conversely commercial banks are in a particularly strong position to benefit from an online investor and stakeholder relations function for a number of reasons:-

• Brand outreach is key because of the competitive nature of the banking industry
• Customer / stakeholder communities are large and widely spread around the World
• Communications corporate governance and reporting complements prudential governance compliance
• Market confidence is critical – a good website adds to corporate reputation. For banks “Online Corporate Reputation” or OCR is a growth area enabling differentiation from peers
• The diverse nature of banking operations provides opportunity to cross sell products and services

View BancABC’s new investor relations website here

View African banking sector annual reports here

Continue Reading

A useful website in assessing how the online landscape is changing and how this might affect shareholder communications is provided by the World Internet Statistics website. For 11 African stock markets, that have been the subject of our recent investor relations research, I have extracted growth statistics over the past 10 years. All of the stats belong to World Internet Statistics. The stats show the following:-

• that overall compound average growth in Internet users per annum has grown 35% per annum in our target markets
• the market that has enjoyed the highest growth is Uganda (58% CAGR per annum) with a current internet user population of 2.5m persons
• Nigeria, Zambia, Ghana and Zimbabwe follow with growth rates of 56,48,48 and 45% CAGR respectively
• Kenya is next at 37%
• The overall Internet penetration rate (users expressed as a percentage of the total population) is 6.8%. Mauritius has the highest penetration rate followed, can you believe it, by Zimbabwe at 12.5%

The combined total Internet users in these markets, markets in which there is a relatively high level of investor interest, is 21 million. This is 21m users out of Africa’s total of 67m users, or 32% of total. A disproportionately higher population of Internet users reside in countries with active stock markets. A total of 329 m people reside in our target markets the  majority of which (149m) reside in Nigeria.

There is a far higher population of Internet users than there are shareholders. And herein is the opportunity.

Continue Reading

Dear African CEO

It’s me again with a brief reminder that in exchange for one hour of your time, and a single decision on your part, you could improve your communications with your business and investment community tenfold. Here is a quote from the SEC worth taking seriously and following it through. It’s common sense I know, but an awful lot of common sense goes unnoticed these days.

“Ongoing technological advances in electronic communications have increased both the markets’ and investors’ demand for more timely company disclosure and the ability of companies to capture, process and disseminate this information to market participants. Indeed, one of the key benefits of the Internet is that companies can make information available to investors quickly and in a cost-effective manner.”

Continue Reading

The following extract from IntelliNews African Telecom & IT Review  and ISI – IntelliNews on November 23, 2009 provides a peak into Kenyan Internet growth which is ramping up after the new Seacom cable down the East Coast of Africa came online in July 2009.

“More homes are connecting to high-speed internet since data service provider, AccessKenya (AK), doubled capacity. The firm is linked to the Seacom and Teams undersea fibre cables. With 500 new customers in Oct, AK has overtaken its 2,800 annual target, AllAfrica.com reported. Group MD, Jonathan Somen, said AK expects to increase market share considerably in 2010. Access@Home guarantees speed, unlimited downloads, better service levels and support. AK’s corporate market share is over 40%. The company estimates its total market at about 7,500, excluding 20% of the 40,000 corporates, giving enormous growth potential.”

No Kenyan listed company has yet to take their investor relations initiatives online. There are significant and compelling reasons why they should.

Continue Reading

Having swept America and conquered Europe, social networking site Facebook is now spreading rapidly through Africa.

From the deserts of Libya to the plains of Tanzania, Facebook is fast becoming the continent’s most visited mobile site as Africans use their phones to access the internet, according to a new report.

Even micro-blogging phenomenon Twitter is making an impact, appearing as the ninth most visited mobile internet site in South Africa and Kenya, according to a study by Oslo-based mobile software developer Opera of the top ten “mobile web” countries in Africa.

The most popular African destination on the mobile web, is Facebook. The social networking site is visited by users of Opera’s mobile web browser in six out of the 10 countries surveyed by the company.

Google is either number one or two in every African state except Kenya where Yahoo! dominates.

Email services such as Hotmail and Gmail are also popular as is YouTube. The online video site has its highest rankings in Egypt, at number three, and Libya, at number four.

Among news sources, the BBC figures strongly in the top ten most visited sites in Nigeria, Kenya, Ghana, Tanzania, Namibia and Zambia. CNN features prominently in the top ten in Nigeria, Ghana and Zambia. They are the only two western news sources among the most popular mobile internet destinations across the ten African countries analysed by the Opera survey.

Sport features strongly with French sports newspaper L’Équipe the sixth most visited mobile web site in Côte d’Ivoire. Egyptian mobile phone users flock to Arabic language sports portal Filgoal.com and Libyans prefer rival Koora.com.

Mobile usage is ballooning across the continent and the African mobile phone market — at more than 400-million subscribers — is now larger than in North America. Some countries, such as South Africa, have ‘mobile penetration levels’ — the number of handsets compared with size of population — close to those of Western Europe.

For many people in Africa, cellphones are the only way that they will ever get access to the internet because of the poor quality, and often complete lack, of fixed-line networks. Fierce competition has pushed mobile prices down for consumers while many of the latest crop of handsets available in Africa allow easy access to the mobile internet. Web browsers can also be installed on older cellphones.

The mobile web browser developed by Opera is the most popular in Africa, accounting for more than half the market, and in its latest State of the Mobile Web report, Opera estimates that the number of handsets using its browser across the top ten African states has leapt 177% in the past year. The report looks at South Africa, Nigeria, Kenya, Egypt, Ghana, Libya, Côte d’Ivoire, Zambia, Tanzania and Namibia. Opera refuses to give overall customer numbers for Africa, but in its largest market — South Africa — it had 1,5-million unique users in October.

Internet-enabled handsets are being used to access ever more mobile web sites, with page views shooting up 374% between November 2008 and last month. In some countries such as Kenya and Zambia, hundreds of pages are being accessed each month as handsets are often used by more than one person to get online. Across the continent roadside kiosks proliferate where people ‘rent out’ mobile phones. At first the devices were little more than a replacement for public phone boxes, allowing people to call friends and family, but increasingly they are being hired out as computers, allowing those who cannot afford a device of their own, to access the internet on a regular basis.

Opera’s mobile phone internet browser is the most popular worldwide, used by almost 27% of all mobile internet users. The iPhone is in second place with Nokia’s web browser in third, between them the top three account for nearly 70% of the market, according to data from StatCounter. Opera estimates that it has more than 41,7-million users worldwide, up from about 16,4-million in November last year, helped in part by the pre-installed browser in many recent models of smartphones

Source: Mail & Guardian

Continue Reading

Despite internet growth that is three times that of the rest of the world, Africa’s regulators and listed company executives are not adopting online strategies quickly enough. Yes, there are barriers to using the internet, but these are falling fast. The frequent complaint that rural shareholders are cut off from online communications is missing the point: Many can receive data on their mobile phone, in all likelihood there is an internet café around the corner, and in any case, if someone can make their way to a stockbroker to invest in shares, then surely they can also be expected to find an internet connection.

The figures simply tell a different story

These are the messages I hear about African telecommunications and capital markets:

• Huge increase in internet connectivity coming onstream before 2010;
• Continued strong mobile growth.
• As a consequence, mobile internet in Africa is the next big thing;
• Many thousands (millions?) of investors result in high cost of engagement; and
• The absence of retail shareholder engagement is an opportunity lost.

So where does African internet usage stand in overall world statistics? According to IWS News and the World Internet Stats website, the new total for the world population is estimated at 6.768bn persons for mid-year 2009, an increase of 91.685m, or 0.4%, over twelve months.

It is estimated that by mid-2009, 24.7% of the world population, or approximately one out of every four persons, uses the internet. And the number of internet users rose at a faster rate than world population since mid-year 2008, when internet penetration was only 21.9%. Each geographic region had a different growth pattern, but Africa’s internet growth rate far exceeds that of the rest of the World by over three times over the past 10 years and looks to accelerate even further.

In African countries with stock exchanges, one in thirteen people, or 6.7%, have access to the internet. However, this is distorted by some of the larger markets, i.e. South Africa, Nigeria and Egypt, who between them account for over 50% of the target population. The country with the highest internet penetration is Mauritius with 29.6%, followed by Egypt 15.9%, Zimbabwe 12.5%, South Africa 9.4%, Kenya 8.6%, Nigeria 7.4% and Uganda 7.7%.

The SEC in the USA commissioned a study on the demographics of the USA’s investors, how technology permeates through society and how this affects regulation and company communication in the capital markets.

Those markets in Africa whose profiles fit the points above – e.g. Nigeria and Kenya should do the same and carry out the following:

• Analyse how the investment community has access to technology and how it uses technology for communications;
• Learn from the investment community what their needs are;
• Identify how the gap between investor needs and existing technology and future technology can be bridged at the lowest cost and greatest efficiency;
• Pursue holistic solutions to market needs;
• Use the private sector to implement these solutions. The private sector has the skills and resources and innovation to apply appropriate solutions at the lowest cost. This will be the greatest challenge.
• Constantly monitor developments thereafter.

Getting regulators involved

And the message to Africa’s regulators is: You have the tools, you have the technologies, and you also now have critical mass. Get the information, assess what you have, then work out how to bring it all together to work in a manner that it specific and relevant to your market. Why?

• To strengthen the reputations of listed companies, regulators and the investment climate as a whole;
• To lower IR communications costs;
• To reach investors in new and existing markets more efficiently;
• To improve investor understanding of listed companies’ potential;
• Facilitate more accurate valuation of listed securities; and,
• Contribute to a fair and vibrant capital market.

Some ideas on how to gather information:

• Set up a national investor information appraisal to get buy in from a broad range of stakeholders. Regulators drive it, politicians endorse it, the private sector facilitates it. Investors participate in it and everyone sees it. It’s in the national interests.
• Set up an interactive website and solicit feedback at every opportunity through all information disseminated through the website and beyond.
• Engage the cell phone companies to explore whether their subscribers own shares either directly or indirectly or are able to take part in a simple cell based questionnaire – offer airtime for a prize to those that do.
• Require every share transfer form to be accompanied by a questionnaire for a fixed period of, say, six months.

As to what to ask, here are a few pointers:-

• Do they own shares directly or indirectly?
• Average income?
• What percent of shareowners use or can access the internet?
• Is access at home or at work?
• What percent have access to mobile phone?
• How often do they trade shares?
• What information would they desire from listed companies?
• Are they happy with the amount of information disseminated by listed companies?
• Are the regulators doing their job?

The information gleaned from such a broad study would provide a useful insight into what people think of investment and how their needs could be met. All it needs is some forward thinkers.

Sources: IWS News & African Is Cool & World Internet Stats

Continue Reading