Multinational companies holding significant stakes in Kenya’s listed firms booked substantial foreign exchange gains on gross dividends earned in the 2023 financial year after the shilling strengthened against the dollar.
The gains reversed some of the forex losses the companies had suffered a year earlier when repatriating their dues abroad.
An analysis of 15 Nairobi Securities Exchange (NSE) firms that have foreign majority owners or parent firms shows that the dividends earned by these owners rose by 13.4 percent or Sh5.9 billion to Sh49.88 billion in 2023, when compared to earnings a year earlier.
When converted to dollars at the prevailing exchange rates at the various dates of payment, these dividends rose by 19 percent or $59.5 million to $379 million.
Companies with large foreign ownership are some of the biggest dollar buyers during their dividend season for onward payment to their external shareholders.
The higher growth rate in the dollar equivalent indicates an exchange gain that reflects the shilling’s strengthening this year by 21.2 percent versus the US currency. In 2023, the shilling had shed 21 percent against the greenback.
For a foreign investor, a weakening shilling means that they get fewer dollars when converting their cash for repatriating dividends or the proceeds of a share sale out of the country. On the other hand, a stronger shilling yields more dollars, hence the exchange gain they enjoyed when comparing the 2022 and 2023 dividends.
NSE data shows that interim and final dividends relating to the 2022 financial year were paid between September 2022 and October 2023 —reflecting the different months that companies close their financial years— while the payments dates for 2023 dividends fall between September 2023 and October this year.
Safaricom made the biggest dividend payment over the period to Vodacom Group Limited and Vodafone Group Plc, which own a combined 40 percent stake in the company that is equivalent to 16 billion shares.
The telco kept its total dividend per share unchanged at Sh1.20 in its financial years ending in March 2023 and March 2024, handing Vodacom and Vodafone dividend payouts of Sh19.2 billion in each year.
When converted to dollars, however, the 2023 dividend was higher at $147.45 million, compared to $138.35 million in 2022.
Similarly, the dividend paid by Equity Group to investment fund Arise BV, which holds a 12.76 percent stake in the lender (481.58 million shares), remained unchanged in shilling terms at Sh1.93 billion between 2022 and 2023 after the lender kept the payout per share unchanged at Sh4.
The dollar equivalent, however, reflected a jump from $13.7 million to $14.9 million between the two years.
Multinational bank owners also booked exchange-related gains, while also enjoying higher dividends after the lenders raised their payouts per share in 2023.
UK lender Standard Chartered Plc, which holds a 73.89 percent stake in the Kenyan subsidiary, saw its dividend earnings from the local unit rise to Sh8.09 billion or $59.43 million in 2023 from Sh6.14 billion or $45.98 million in 2022, reflecting both the exchange gain and an increase in its payout per share to Sh29 from Sh22.
Absa Bank Kenya raised its dividend per share to Sh1.55 from Sh1.35 in 2022, resulting in a rise in its payout to its South African parent Absa Group (68.5 percent stake) from Sh5.02 billion to Sh5.77 billion, while in dollar terms the distribution rose from $37.1 million to $43.2 million.
Standard Bank
South Africa’s Standard Bank, the majority owner of Stanbic Kenya, earned Sh4.55 billion in 2023 compared to Sh3.73 billion in 2022, after the subsidiary raised its payout per share to Sh15.35 from Sh12.6.
BAT Kenya, which is 60 percent majority-owned by UK multinational British American Tobacco Plc, reduced its dividend per share to Sh50 in 2023 from Sh57 a year earlier, cutting its distribution to the parent by 12.3 percent to Sh3 billion, from Sh3.42 billion.
The reduction in dollar equivalent was 7.3 percent, from $24.8 million to $23 million due to the exchange rate factor.
