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This research report was prepared by the Research Department of Old Mutual Securities Limited. Old Mutual Securities Limited is a securities trading company licensed by the Capital Markets Authority (Kenya) for the purpose of facilitating trade on the Nairobi Securities Exchange.

Here are our views on the news making headlines today for Kenya:
Botswana supermarket chain Choppies Enterprise has opened a Kenyan subsidiary ahead of a planned entry into the local retail market through an acquisition. Choppies has disclosed in its pre-listing statement at the Johannesburg Stock Exchange (JSE) that it has registered a dormant subsidiary in Kenya for future operations. The revelation by Choppies comes after it announced its expansion plans into Kenya, Tanzania and Zambia.

Our View: Retail supermarket chains in Kenya prove resilience to the unfavorable economic conditions as witnessed by their expansion rates. The entry of Choppies Enterprise in Kenya adds to the growing competition across major retail chains with international store chains and private equity investors also coveting the strong growth prospects in the country. Kenya, with a GDP of USD 53.4 billion, is a gateway to regional trade, though it holds other attractions for retail investors. The penetration of formal retail supermarkets in Kenya is 25-30%, double that of Africa's biggest economy Nigeria. Nonetheless, the average value of a shopper's basket has risen 67% in five years to USD 20, making Kenya the continent's fastest-growing retail market. Choppies planned entry through acquisition makes liquidity constrained retail supermarkets such as Uchumi become a potential takeover target.
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