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Kenya’s Technoservice vs. Nokia: Court Upholds Arbitration Ruling

This ruling underscores the rising trend in Kenya’s corporate landscape, where arbitration is becoming the preferred method for resolving disputes. As businesses navigate complex contracts, increased reliance on arbitration may streamline conflict resolution and enhance market stability

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The dispute arose when Technoservice accused Nokia of breaching contractual obligations in a 2021 partnership aimed at enhancing telecommunications in Kenya. Despite initial optimism, Technoservice claims Nokia unilaterally withdrew from the deal by mid-2023, causing major operational disruptions and significant financial losses.

:Court ruling favors Technoservice as arbitration against Nokia proceeds, shedding light on contract breach claims and the impact on Kenyan business

 By Charles Wachira

In a significant ruling for the Kenyan business landscape, a local court on October 23, 2024 declined to intervene in the ongoing arbitration proceedings between Technoservice, a Kenyan telecommunications firm, and Nokia, the renowned global technology giant.

 The decision stems from allegations of contract breach, with Technoservice seeking remedies for purported failures by Nokia to deliver on agreed terms.

Background of the Dispute

The dispute began when Technoservice accused Nokia of failing to meet specific contractual obligations in a partnership aimed at enhancing telecommunications services in Kenya. The deal was initially struck in 2021, with both companies optimistic about leveraging their strengths to improve service delivery. However, by mid-2023, Technoservice claims Nokia had unilaterally pulled out of the contract, resulting in significant disruptions to its operations and substantial financial losses.

Bulent Gulbahar, the Managing Director of Technoservice, articulated his frustrations in a statement following the court’s decision. “We entered into this contract in good faith, with the expectation that Nokia would uphold its commitments. Their failure to do so has not only harmed our business but has also jeopardized the quality of service we provide to our customers,” he asserted. Gulbahar emphasized that the arbitration process is crucial for resolving the issue and restoring the trust necessary for their ongoing partnership.

The Court’s Rationale

The judges’ ruling underscored the importance of arbitration as a means to resolve commercial disputes, emphasizing that the legal system must respect the parties’ choice to settle disagreements through arbitration. “Interfering with arbitration proceedings could undermine the integrity of contractual agreements and the trust that businesses place in these processes,” remarked Judge Anne Njeri, who presided over the case.

Another judge, Justice Michael Wanjala, added, “The court’s role is not to substitute its judgment for that of the arbitrators, especially when the parties have explicitly agreed to arbitration as their dispute resolution mechanism. The autonomy of the arbitration process must be preserved.”

Arguments from Both Sides

Technoservice’s legal team argued that Nokia’s actions constituted a breach of contract, warranting immediate attention from the court to prevent further damages. “The continued inaction from Nokia is unacceptable. Our client deserves a fair resolution to this matter without undue delay,” stated attorney Sarah Maina.

On the other hand, Nokia’s representatives contended that the arbitration process was already underway, asserting that it was the appropriate forum for resolving the dispute. “We believe that the arbitration will address Technoservice’s claims adequately, and we look forward to presenting our case,” said Nokia’s legal counsel, who emphasized the company’s commitment to fulfilling its contractual obligations.

Implications for Kenyan Businesses

This ruling highlights the growing trend in Kenya’s corporate environment, where arbitration is increasingly favored as a means of resolving disputes. As businesses continue to engage in complex contracts, the reliance on arbitration could serve to streamline conflict resolution and promote stability within the market.

Gulbahar expressed hope that the arbitration will lead to a resolution that not only addresses Technoservice’s grievances but also sets a precedent for future contractual relationships. “Our aim is not just to seek compensation but to ensure that companies like Nokia adhere to their commitments. This case is about accountability and the importance of maintaining high standards in business partnerships,” he concluded.

As the arbitration progresses, industry observers will closely monitor the situation, recognizing its potential to impact future dealings between Kenyan companies and multinational corporations. The outcome could redefine expectations and standards within the telecommunications sector and beyond, emphasizing the necessity of integrity and accountability in business operations.

Keywords:Technoservice:Nokia:arbitration:contract dispute:Kenyan businesses

Charles Wachira, Managing Editor of businessworld, has disproportionately worked as a foreign correspondent in Nairobi, Kenya. Formerly an East Africa correspondent with bloomberg, covering the business beat he has since been published by a legion of other authoritative global news platforms including Global Finance Magazine, Toward Freedom, Earth Island Journal, and Dialogue. earth and so on. He is also a co-author of, Success to Significance, a biography of pre-eminent global industrialist and renowned philanthropist Dr. Manu Chandaraia. He’s an alumnus of the University of Nairobi and Nairobi School.

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Business & Money

KCB Group Surpasses Equity with US$ 342.31 Million Nine-Month Profit

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: KCB Group reports Sh44.5B ( US$ 342.31) nine-month profit, outpacing
Equity Bank. Learn about its 49% growth, challenges, and stock performance this
year.

KCB Group Plc has outperformed Equity Bank to cement its position as Kenya’s leading
lender, posting a net profit of Sh44.5 billion for the nine months ending September

This represents a 49% year-on-year growth, surpassing Equity Bank’s Sh37.5
billion profit during the same period.

Profit Growth Driven by Core Business Performance

The remarkable profit growth was fueled by higher earnings from both interest and non-
interest income streams. KCB’s diverse revenue base has been pivotal in maintaining
its dominance in the competitive banking sector.

Non-Performing Loans a Key Concern

Despite the impressive profit growth, KCB’s non-performing loan (NPL) ratio rose to
18.5%, compared to 16.5% last year. This increase highlights persistent challenges in
managing credit risk, with Chief Financial Officer Lawrence Kimathi acknowledging it as
a “pain point” for the bank.

KCB Stock Outshines Peers on NSE

KCB’s strong financial performance has translated into exceptional stock market results.
The bank’s stock has risen 78.8% year-to-date, making it the best-performing banking
stock on the Nairobi Securities Exchange (NSE).

Plans to Sell National Bank of Kenya

Earlier this year, KCB announced plans to sell its struggling subsidiary, National Bank of
Kenya (NBK), to Nigeria’s Access Bank. While Nigerian regulators have approved the
deal, it is still awaiting clearance from Kenya’s Central Bank. The sale aims to
streamline KCB’s operations and address losses at NBK.

CEO Paul Russo Optimistic About Year-End Performance

“The journey has not been without its hurdles, but our ability to walk alongside our
customers has driven our success,” said KCB CEO Paul Russo. He expressed

confidence in closing the year on a high note, leveraging improving economic conditions
across the region.

Key Figures at a Glance

● Net Profit: Sh44.5 billion (+49%)
● Non-Performing Loan Ratio: 18.5% (up from 16.5%)
● Stock Performance: +78.8% year-to-date

KCB’s strong performance underscores its resilience in navigating challenges and its
commitment to sustaining growth in Kenya’s banking sector.

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Top 10 Kenyan banks by total assets as of 2023, based on data from the Central Bank of Kenya:

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banks in kenya

KCB Bank Kenya Limited

Total Assets: KSh 1.425 trillion
Market Share: 17.4%

Equity Bank Kenya Limited

Total Assets: KSh 1.004 trillion
Market Share: 12.2%

NCBA Bank Kenya PLC

Total Assets: KSh 661.7 billion
Market Share: 9.2%

Co-operative Bank of Kenya

Total Assets: KSh 624.3 billion
Market Share: 8.8%

Absa Bank Kenya PLC

Total Assets: KSh 520.3 billion
Market Share: 6.6%

Standard Chartered Bank Kenya

Total Assets: KSh 429.3 billion
Market Share: 5.9%

Stanbic Bank Kenya

Total Assets: KSh 449.6 billion
Market Share: 5.8%

I&M Bank Limited

Total Assets: KSh 405.6 billion
Market Share: 5.4%

Diamond Trust Bank Kenya

Total Assets: KSh 399.6 billion
Market Share: 5.3%

Bank of Baroda (Kenya) Limited

Total Assets: KSh 201.9 billion
Market Share: 2.8%

These rankings illustrate the dominance of large Tier 1 banks, which collectively control over
76% of the market share. Strategic expansions, increased deposit mobilisation, and robust
lending practices underpin the sector’s strong performance​

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Vasundhara Oswal’s Legal Struggles and Family’s Plea for Justice

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: Vasundhara Oswal, daughter of industrialist Pankaj Oswal, faces serious
charges in Uganda. The Oswals call for UN intervention amid claims of corporate
jealousy.


Vasundhara Oswal, the 26-year-old daughter of prominent Swiss-Indian industrialist
Pankaj Oswal, has found herself at the centre of a legal storm in Uganda.
Her father, a well-established business figure, is known for his diverse investments,
most notably a $150 million ethanol plant in Uganda.

This plant, the largest of its kind in East Africa, is a key part of Oswal’s broader strategy
to invest in industrial and eco-friendly solutions in the region. The facility produces extra-neutral alcohol (ENA), which is used in the beverage, cosmetics, and pharmaceutical industries.

It is recognised for its modern technology and sustainable practices, such as zero liquid
discharge, emphasising the Oswal family’s commitment to both industrial growth and
environmental responsibility.

In addition to the ethanol plant, Pankaj Oswal has made strategic investments across
various industries, including petrochemicals, agriculture, and real estate.
His ventures reflect a global reach, extending to Australia and India, where he has
been involved in industries ranging from agriculture to renewable energy.

His diversified business approach and commitment to sustainability have made him a prominent figure in international business. However, in October 2024, the family’s legacy was overshadowed by the legal troubles surrounding Vasundhara Oswal.

She was detained on October 1, 2024, after being accused of involvement in the
alleged murder of Mukesh Menaria, a former employee who had worked with the
Oswals since 2017.

Menaria had accused the family of harassment but later testified under oath that they
had not harmed him Despite this, charges of kidnapping and murder were brought against Vasundhara.

Her family has strongly denied these allegations, claiming that the charges are
politically motivated and part of a larger conspiracy orchestrated by their business rivals
in collaboration with corrupt officials in Uganda.

The Oswals have appealed to the United Nations, seeking intervention and asserting
that the legal proceedings against Vasundhara are unlawful. Vasundhara has actively managed the family business throughout her career, especially the ethanol plant, and led the company’s sustainable initiatives.

Beyond her business involvement, she has also been an advocate for community
welfare and mental health, further cementing the Oswal family’s reputation for corporate
social responsibility.

The unfolding legal drama has raised important questions about the intersection of
business, politics, and the legal systems in Uganda.

While the Oswal family’s ventures reflect a blend of industrial innovation and social
responsibility, the legal challenges Vasundhara faces have cast a shadow over their
business empire, highlighting the complex dynamics at play in East Africa.

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