Business & Money
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
: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
Business & Money
Safaricom Lowers Earnings Forecast Amid Ethiopian Currency Woes
Safaricom, partly owned by Vodacom and Vodafone, saw group service revenue rise 14% to 181.4 billion shillings by September. However, net income dropped 17.7% year-on-year, impacted by a 106% depreciation of Ethiopia’s birr after the government allowed the currency to float freely, said CEO Dr. Peter Ndegwa.
:Safaricom adjusts full-year earnings outlook due to Ethiopian birr depreciation, impacting revenue despite strong growth in Africa’s second-largest telecom market.
Kenya’s largest telecom operator, Safaricom, revised down its full-year earnings forecast on November 7 2024, citing a sharp drop in net income driven by the depreciation of Ethiopia’s birr.
Safaricom, which won the first telecom license in Ethiopia in 2022 after sector liberalisation, is expanding in Africa’s second-most populous nation, with approximately 120 million people. However, despite strong customer growth, it has faced hurdles, including security concerns, inflation, and currency volatility.
The company reported that group earnings before interest and taxes (EBIT) rose 31.9% year-on-year for the half-year period, but it now expects full-year earnings to reach between 94 billion and 100 billion Kenyan shillings ($731 million to $778 million), down from its previous estimate of 103 billion to 109 billion shillings.
Safaricom, partly owned by Vodacom of South Africa and Vodafone of the UK, recorded a 14.0% increase in group service revenue, reaching 181.4 billion shillings by the end of September. Nonetheless, net income fell 17.7% year-on-year, impacted by the Ethiopian birr’s 106% depreciation, following the government’s decision to let the currency float freely, said Peter Ndegwa, Safaricom’s CEO.
“Despite the short-term challenges, we are optimistic about the long-term success of our Ethiopian venture and encouraged by the accelerating commercial performance,” Ndegwa said. Ethiopia adopted a market-driven foreign exchange rate in July as part of reforms to liberalise its financial sector, aiming for a new IMF lending program and a long-delayed debt restructuring.
Safaricom’s Ethiopian business launched two years ago, is now expected to break even in 2027 due to the foreign exchange reforms, according to Ndegwa. “Given the uncertainty around the exchange rate by year-end, a 10% currency depreciation would impact our balance sheet by around eight billion shillings,” he added.
CFO Dilip Pal noted that while the birr’s depreciation weighed heavily on half-year results, its effect on full-year earnings should be less significant.
Safaricom’s shares on the Nairobi Securities Exchange, where it is the largest-listed company, fell 2.75% by 0744 GMT.
Business & Money
David Ngata Appointed I&M CFO
David Ngata’s move to I&M Group comes at a crucial time as the bank aims to enhance its footprint in the competitive East African banking sector, where digital transformation and evolving customer needs are reshaping the industry.
: Former Equity Bank CFO David Ngata joins I&M Group as CFO, enhancing leadership with over 25 years of experience in global banking and finance.
By Charles Wachira
In a significant leadership shakeup, I&M Group has appointed David Ngata as its new Chief Financial Officer, effective October 16, 2024, in a move aimed at bolstering its executive team.
Ngata, the former CFO of Equity Bank, brings over 25 years of financial expertise and global experience that promises to drive I&M’s growth in Kenya and across East Africa.
Known for its customer-focused financial solutions in corporate banking, retail services, and asset financing, I&M Group is set to benefit greatly from Ngata’s deep understanding of both regional and international finance.
An Impressive Global Career
Ngata’s career spans an impressive roster of roles in top-tier financial institutions. David Ngata Joins I&M Group as CFO.
Before joining Equity Bank in 2018, he worked at American Express in New York, where he sharpened his insights into global financial management.
He also served as an Audit Senior Manager with KPMG, working in both Kenya and the United States.
This wealth of experience has equipped Ngata with a keen eye for operational efficiencies, regulatory compliance, and strategic finance management, all of which he brings to his new role at I&M.
A Transformative Role at Equity Bank
At Equity, Ngata’s role as Group Finance Director saw him overseeing finance teams across six countries: Kenya, Uganda, Tanzania, South Sudan, Rwanda, and the Democratic Republic of Congo.
His leadership was instrumental in Equity’s remarkable growth across East Africa, as he developed cross-border financial strategies, implemented risk management frameworks, and introduced cost-efficiency measures that helped the bank navigate through challenging economic periods.
In 2022, he was promoted to CFO, where he continued to guide Equity’s financial direction, reinforcing its position as one of East Africa’s top financial institutions.
Academic Excellence and Professional Credentials
Ngata’s academic credentials complement his extensive professional background.
He holds a Master of Science in Business Analytics from Carnegie Mellon University and a Bachelor of Commerce in Marketing from the University of Nairobi.
His Certified Public Accountant (CPA-K) qualification, along with memberships in both ICPAK (Kenya) and AICPA (USA), highlights his commitment to high standards in finance and professional excellence.
Positioning I&M Group for Growth
Ngata’s move to I&M Group comes at a crucial time as the bank aims to enhance its footprint in the competitive East African banking sector, where digital transformation and evolving customer needs are reshaping the industry.
David Ngata Joins I&M Group as CFO, filling the gap left by former CFO Amit Budhdev, who exited in December 2023.
Ngata’s strategic mindset and vast experience are expected to play a pivotal role in shaping I&M’s financial strategies, optimizing risk management, and seizing new growth opportunities.
A Future of Resilience and Innovation
Industry analysts are optimistic about Ngata’s impact on I&M Group, noting that his leadership could help the bank strengthen its market position and continue innovating to meet customer needs.
David Ngata Joins I&M Group as CFO. As Ngata steps into this key role, he is set to lead I&M’s financial team toward new heights, positioning the bank for a future defined by resilience, growth, and transformative finance solutions in East Africa.
Business & Money
Diamond Trust Bank Kenya Named Murali M Natarajan As CEO
Murali Natarajan’s appointment underscores DTB’s commitment to expanding its impact in Kenya and East Africa. With a track record in mobile banking, loan digitization, and customer-focused services, Natarajan is well-positioned to drive DTB’s transformation into a fully digital, customer-first institution. His leadership promises to shape the bank’s long-term strategy and resilience in an ever-evolving market.
DTB Kenya appoints Murali Natarajan as CEO, aiming for growth, digital expansion, and SME support in Kenya’s competitive banking landscape.
In a strategic move poised to deepen Diamond Trust Bank’s (DTB) leadership in Kenya’s banking sector, Murali Natarajan, a veteran banker from India, has taken the helm as the new Managing Director and Chief Executive Officer.
Natarajan’s appointment is not only a significant leadership change for DTB but also marks a crucial step in the bank’s continued evolution and resilience in a competitive landscape.
Murali M Natarajan a Veteran Banker with a Vision
With over three decades in banking, Murali Natarajan has built a reputation for steering banking institutions toward growth, especially in challenging economic environments.
Known for his customer-centric approach and operational acumen, Natarajan brings a wealth of experience from his previous roles in top-tier financial institutions, notably in India, where he played a key role in transforming banks through innovation, efficiency, and prudent risk management.
DTB’s Regional Expansion and Digital Push
Under Natarajan’s leadership, DTB is expected to sharpen its strategic focus on regional expansion and digital banking transformation.
The bank, already a key player in Kenya and the East African region, has seen steady growth in its network and asset base, expanding its footprint in Uganda, Tanzania, and Burundi.
Natarajan’s extensive background in digital banking and microfinance offers DTB a unique opportunity to capitalize on the growing demand for digital financial services in East Africa.
Given the increasing competition in Kenya’s banking sector, where over 40 banks are vying for a share of a rapidly digitalising market, Natarajan’s digital-first approach could provide DTB with a competitive edge. In India, Natarajan was recognized for rolling out digital solutions that improved customer engagement and broadened financial inclusion.
For DTB, which is looking to increase its digital footprint and integrate more accessible banking solutions, this experience could prove invaluable.
Addressing Challenges in Kenya’s Banking Sector
Natarajan’s appointment comes at a time when Kenya’s banking industry is navigating a mix of regulatory pressures, evolving consumer expectations, and economic headwinds.
The sector has faced increased scrutiny from the Central Bank of Kenya, which is pushing for more transparency, stronger governance, and digital inclusivity.
Furthermore, with Kenya’s inflation and interest rates creating volatility, Natarajan’s strong background in risk management could be instrumental in steering DTB through economic uncertainties.
The veteran banker’s experience will likely play a crucial role in addressing the rising demands for loan restructuring and risk mitigation, especially as more customers and businesses seek financing in a post-pandemic economy.
His tenure at various financial institutions has shown his adeptness at balancing growth with caution, a skill set that will be essential as DTB positions itself as a key partner in Kenya’s economic recovery efforts.
Expected Impact on DTB’s Performance and Strategy
Industry insiders are optimistic that Natarajan’s experience will catalyze DTB’s growth trajectory.
His focus on operational efficiency and digital innovation could lead to improved financial performance, while his understanding of micro and SME financing aligns with DTB’s mission to empower Kenya’s small and medium enterprises.
His approach is expected to bolster DTB’s role as a supportive financial partner for SMEs, which form the backbone of Kenya’s economy.
By bringing in a seasoned executive with a global perspective, DTB signals its ambition to evolve beyond traditional banking.
Natarajan’s previous success in pioneering initiatives like mobile banking, loan digitization, and customer-centric financial services could play a transformative role in DTB’s journey toward becoming a fully digitized, customer-first institution. His leadership will be instrumental in shaping DTB’s long-term strategy and resilience in a fast-evolving market.
Looking Ahead
Murali Natarajan’s appointment is a clear indicator of DTB’s commitment to scaling its impact within Kenya and the East African region.
As he steps into his role, all eyes will be on how he leverages his international experience to drive DTB’s growth, strengthen its digital capabilities, and deepen its regional reach.
For Kenya’s banking sector, his tenure promises to introduce new innovations and operational practices that could set a benchmark for other financial institutions in the region.
In a highly competitive sector, DTB’s choice to bring in a leader with Natarajan’s pedigree reflects a vision for growth, transformation, and resilience—qualities that could shape the bank’s future for years to come.
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