Kenyans should be excused for harbouring the inaccurate impression that Kenya Airways #ticker:KQ (KQ) has suddenly found itself in a financial dementia whose only prescription for resuscitation is taking over the operations of Jomo Kenyatta International Airport (JKIA) from Kenya Airports Authority (KAA).
What is being fed to the unsuspecting public by the proponents of the JKIA take-over by KQ does not reflect the true picture.
This rationale behind the Privately Initiated Investment Proposal (PIIP) by KQ is therefore not the ultimate solution to resuscitate KQ.
In February 2017, an international consultancy firm, Seabury Group, contracted by KQ to advise the airline on a viable turnaround strategy made very plausible recommendations.
Key among them being conversion of debts owed to local banks and the government to equity which was implemented in 2017 and resulted in spurring the airlines liquidity and cash-flows.
Another recommendation was on how to engage the Unions which KQ is yet to embrace. KQ was also to engage the government on tax waivers on imported aircraft parts and other materials used for aircraft maintenance as well as enactment of a law to ensure all government employees and contractors utilise KQ for their travel.
Additionally, KQ was expected to proactively engage the government to also waive taxes on jet fuel to save the airline over Sh7 billion annually, an amount that is more than what KQ would generate out of running JKIA.
Sadly, KQ pays Railway Maintenance Levy for its jet fuel, yet this levy goes to support a sector seen as a competitor. Of significant importance is that the take-over of JKIA was not one of the recommendations by Seabury.
We are therefore convinced that this deal is driven by other motives in lieu of sound recommendations made by Seabury. Why would KAA be made to relinquish its most profitable business unit to save KQ when there are other plausible options to achieve the same if not better?
KQ has a rich reservoir of great talent of well skilled men and women able to run the airline, but majority who are dejected have found solace with Gulf carriers. Over 500 KQ employees have in last five years left for Middle Eastern airlines, which offer better terms.
It is plainly clear the overriding objective for KQ take-over of JKIA has to do with finances. The net effect of this transaction, if it ever goes through, is a financially diminished, empty and hollow KAA, unable to execute its mandate.
This begs the question, what value, financial or otherwise, would KQ bring into this transaction? KQ has neither the financial capacity nor the knowledge and experience to run and manage an airport. The Public Private Partnership (PPP) Act envisages a situation where both parties to the partnership benefit. How then does it benefit KAA to cede its premier cash – cow to KQ in exchange for a concession fee less than one third of its current earnings?
The writer is Secretary-general, Kenya Aviation Workers Union.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.