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What new national carriers mean for Kenya Airways

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What new national carriers mean for Kenya Airways

Kenya Airways
A Kenya Airways plane at the JKIA in Nairobi. FILE PHOTO | NMG 

It is currently not possible for a single airline to serve the whole continent. That is what Abderahmane Berthe, Secretary General of the African Airlines Association (AFRAA), believes.

But if Delta were an African Airline, it would be starved of passengers since Africa accounts for just 100 million passengers yearLY, according to International Air Transport Association (IATA). Delta serves nearly 200 million people every year taking customers to more than 300 destinations in over 50 countries.

According to Michael Porter’s five competitive forces that shape strategy, airline industry is the least profitable sector known to man. Mr Porter notes that the nature of rivalry in airlines is so intense that it largely relies on price, hence the introduction of other innuendoes like the cabin crew’s attractiveness.

Despite possessing just 100 million air passengers, almost every African country appears to be establishing their national carriers, but for what purpose if airline business is the least profitable?

Every airline has to come up with a strategy that will fly its colours high above the rest. This brings about the ever powerful brand loyalty concept which advances that a loyal consumer would consume a brand for a longer period of time despite availability of other options. In Africa, nationalisation of airlines is being propelled as the only solution to achieve brand loyalty. However, the intrigues behind this are even more eye catching.

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In 2018, Ethiopian Airlines (ET) announced it bought a 45 percent stake to revive Zambia Airways, which went into liquidation in 1994. ET has also been in talks with other African governments including Ghana to re-launch their national carriers.

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In 2017, Ethiopia was in negotiations to manage Nigeria’s biggest private airline Arik Air which failed, but the company has reportedly expressed interest in two other initiatives in Africa’s largest market. Ethiopian Airlines already operates Malawian Airlines through a deal signed in 2013, and partners with privately-owned ASKY Airlines through a hub in Lomé, Togo.

Privately held Guinea Airlines which is named after the formerly national carrier is now operating under a strategic partnership between Ethiopian Airlines, ASKY and Guinea Airlines. The Ethiopian carrier commenced services from Conakry to destinations in Mali, Burkina Faso and Guinea, operated by ASKY.

The strategic relationship does not end with Guinea alone, it also extends to Gold Coast. In May this year, the Ghanaian Government finalised a strategic partnership agreement with Ethiopian Airlines over the formation of a new national carrier following a memorandum of understanding that was signed between the two sides in December 2018.

In October 2018, Tchadia Airlines became a new regional operator based at N’Djamena Airport in Chad. This Company is backed by ET. 51 percent of Tchadia is controlled by the Chad Government, while the remaining 49 percent is owned by the Star Alliance to which ET is a member.

From a brand loyalty perspective, ET is applying a semi horizontal business strategy of forging alliances, partnerships and acquisitions all while appearing to stay away from the brand identity of its associates. The idea is to take as much of the 100 million within Africa every year, a creative destruction strategy.

The effect of this is that our national carrier, Kenya Airways, loses its market share because local travellers will shift to their respective national carriers most of whom are in partnership deals with Ethiopian Airlines. Other regional countries have put in efforts to muddy the waters of the industry.

Uganda Airlines has set out to eat into the Kenya Airways market share in the region flying the same routes as KQ. Mozambique is a unique case because it comes after the ban on their airline by the European Union was lifted. With its expansion, another chunk of KQ’s market share taken away.

The government of Kenya should fast-track nationalisation of the airline and leverage its extensive bilateral networks to protect market share.

Mr Ngamate is a former business lecturer at the International College of the Cayman Islands. Email: [email protected]

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World Bank pushes G-20 to extend debt relief to 2021

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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.

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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.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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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.

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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.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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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.

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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.

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