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Need for new strategy as Kenya’s airline sector reports mixed fortunes




Stiff competition persists in a shrinking domestic market even as international travel picks up

The contribution of air travel to the economy is sluggish even as the number of domestic passengers and volume of cargo transported shrinks, reveals a Nation Newsplex analysis of air travel data.

Air transport’s contribution to Kenya’s gross domestic product fluctuated between 0.3 percent and 0.4 percent in the past five years. During the same period, the output from the sector jumped by more than a third to Sh183.1 billion in 2017 from Sh131.4 billion in 2013.

The increase in earnings was partly due to international passenger arrivals and departures which rose steadily for the second year, increasing by six percent to 6.1 million in 2017 from 5.7 million the previous year, according to the Economic Survey 2018.

While there was an upswing in international arrivals in the first half of 2017 over the previous year, the numbers fell in the second half, largely due to uncertainties around the prolonged electioneering period.

But the number of domestic passengers dipped slightly from four million in 2016 to 3.9 million last year.

As fewer Kenyans opt for local air travel and more airlines join the domestic market, competition in the subsector is stiffer.

This year alone has witnessed new players joining various domestic routes in the country. For instance, the Nairobi-Kisumu route had two new players – Britex Air Services and Freedom Airlines – while Safarilink has added the number of daily flights. The expansion has intensified competition with other carriers, such as Fly540, Jambojet and Kenya Airways that already serve the route.

Airports in Kenya handled a total of 10 million arriving and departing domestic and international passengers, as well as those transiting to other countries. This was an increase of three percent from 9.8 million in 2016.

Of these, two in three were international passengers, with an estimated three million being arrivals. In an election year traditionally marred by fewer visitors due to fears of political unrest, this was a surprise seven percent increase from 2.8 million international arrivals in 2016.

The number of international arrivals increased in the past five years, except for 2015, when it decreased by two percent to 2.6 million from 2.7 million in 2014. This was attributed to security concerns and travel advisories from some European markets.

The volume of cargo handled in the past four year has trended downwards except for last year, when cargo volumes increased by 17 percent to 291 million tonnes from 249.5 million tonnes in 2016. But the subsector’s improvement was short-lived. A year-on-year analysis shows that the amount of cargo handled in July 2018 dipped by 16 percent to 25,566 tonnes compared to 30,422 tonnes in July the previous year. The three main cargo handling airports − JKIA, Moi and Eldoret − recorded dips in cargo volumes.


Wilson Airport is the only one that recorded an upturn in cargo handled, by 15 percent from 190,325 tonnes to 218, 510 tonnes. This could be credited to more miraa being transported to Somalia and the Horn of Africa, following the highly contested product ban in the UK and the Netherlands.

Lokichoggio and Malindi airports did not handle any cargo in the period reviewed.

Despite the decline in local passengers and cargo volume, domestic aircraft flights (landings and take-offs) increased by two percent from 204,803 in 2016 to 207,831 in 2017. This was higher than international flights, which increased by only 0.5 percent from 93,029 to 93,497 in the same period. This could suggest that aircraft are carrying fewer goods and passengers than their capacity.

The Kenya Airports Authority (KAA) registered a year-on-year increase in aircraft movements in airports and airstrips from 27,179 in July 2017 to 27,955 in July 2018.

The year-on-year figures show that JKIA was the busiest, at 9,874 flights in July this year, a six percent rise over the same period in 2016. The airport benefitted from enhanced flight frequencies by scheduled carriers as well as charter operations. Wilson Airport was the second busiest, with 9,612 movements. However, this was a decline of five percent from 10,092 flights last year, an observation KAA attributed to fewer test training flights.

Moi International Airport was third (2,332), followed by Malindi Airstrip (1,209) and Ukunda Airstrip (956). Whereas Moi International Airport recorded an increase in flights due to additional charters serving the tourism market on the Coast, Malindi’s was linked to increased training flights.

Isiolo Airport had the least activity, at 40 flights, a fall by a third from 61 in the same period last year. The Sh2.7 billion facility, launched in 2017 by President Kenyatta, is still operating below its capacity, handling only four flights a week since its opening, despite having an estimated capacity of 350,000 passengers annually. The KAA links the low activity to the discontinuation of scheduled Fly-SAX flights.

Ukunda Airport had the highest increase in passenger traffic. The number of travellers who passed through the airport jumped by almost half from 11,759 to 17,348 passengers in July 2018, driven by increased tourism activity on the Coast. Wilson Airport, on the other hand, had its passenger traffic go up by 41 percent, a growth linked to the tourist activities at the Maasai Mara related to the wildebeest migration spectacle.

About two-thirds of international visitors in 2017 were on holiday, whereas 13 percent had jetted in for business-related engagements, and six percent were in transit.

It was not all bright in international travel though. While there was an upswing in international arrivals in the first half of 2017 over the previous year, the numbers fell in the second half, largely due to uncertainties around the prolonged electioneering period

The national flag carrier Kenya Airways blamed the unusually long campaign season for its shrinking turnover.

Read part two of the series on air safety and air crash investigation performance in the Sunday Nation tomorrow



Sordid tale of the bank ‘that would bribe God’




Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –




Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

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William Ruto eyes Raila Odinga Nyanza backyard




Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

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