african-news-header

Multimedia

multimedia

 

Monday, 23rd September 2019
7:02:40am

Business

Articles related to business

Kenya Airways must avoid picking a board packed with politically-connected individuals after it is renationalised in order to ensure future success, its chairman said on Tuesday. 

The loss-making airline, which is 48.9% government-owned and 7.8% held by Air France-KLM, was privatised 23 years ago but sank into debt and losses in 2014. Lawmakers voted to re-nationalise it in July.

Chairman Michael Joseph said the requirement for professionals to be put in charge of the airline is being built into draft laws that will guide the renationalisation.

“It must be run in a commercial way,” he told reporters on the sidelines of an aviation meeting.

“We do not want to create a situation that we had before, where you nationalise the airline and all it becomes is a department of government. The board of directors is loaded by friends of politicians.” 

A failed expansion drive and a slump in air travel forced the airline to restructure $2 billion of debt in 2017. But Kenya Airways still needed cash for fleet and route expansion amid growing competition from Ethiopian and Emirates.

Kenya wants to emulate countries like Ethiopia, which runs air transport assets - from airports to fuelling operations - under a single company, using funds from the more profitable parts to support others.

Under the model approved by lawmakers, Kenya Airways will become one of four subsidiaries in an Aviation Holding Company.

The others will be Jomo Kenyatta International Airport (JKIA), the country’s biggest airport, an aviation college and Kenya Airports Authority, which will operate all the nation’s other airports.

“We want to make sure that if you create a nationalised airline that it will operate as a semi-autonomous airline,” Joseph said. 

Competition among regional carriers rose at the end of last month when Uganda Airlines resumed flights after almost two decades.

Joseph said such developments left Kenya without any choice but to renationalise its airline, in order to cut costs and survive in the crowded Africa aviation market, where carriers have the weakest finances and emptiest planes of any region in the world.

“If we don’t do this we have no airline,” he said.

-Reuters 

The National Chairperson of Nigeria's ruling party, the APC, has called for a boycott of South African goods and services at a media conference in Abuja.

This follows a wave of xenophobic attacks and looting in Gauteng, which has caused outrage in the west African country.

In a video of a media conference uploaded by Channels TV, All Progressives Congress national chair Adams Oshiomhole said attacks on foreigners in SA, many of whom are Nigerian, were no longer tolerable and time had come for a "direct bold statement". Authorities in SA had not demonstrated sufficient commitment to bring these attacks to an end, he added.

"I think right away Nigerians, in our individual capacities, this is the moment to show our commitment to our citizens by boycotting South African goods and South African businesses," he said.  

According to Nigerian media, the press conference was held at the end of a closed-door meeting of the party's National Working Committee on Thursday. 

Oshiomhole said that while the SA government was envious of the small business acumen of Nigerians living in SA, SA companies were making "billions of dollars" from Nigeria and allegedly repatriating huge profits.

He slammed comments made by former Deputy Minister of Police, Bongani Mkongi, who said in 2017 that some SA cities were 80% foreign, and that Hillbrow in Johannesburg "had surrendered to the foreign nationals". According to AfricaCheck, while the video is dated it has been been raking in views "in the thousands". The group found that data "does not back up this controversial claim".

President Cyril Ramaphosa has condemned the xenophobic attacks and looting, while Finance Minister Tito Mboweni told the WEF Africa Forum in Cape Town that all Africans were welcome in South Africa, and a majority of South Africans were against xenophobia.  Nigeria has officially boycotted the WEF.

Lai Mohammed, Nigeria's minister of information, said in a separate video uploaded to the ministery's Twitter page that the Nigerian government was "ready to evacuate Nigerians willing to retun home from SA". 

He added that certain video clips being circulated purportedly showing Nigerians being killed in South Africa were false. "Those who are circulating these video should resist from doing so". 

* This article has been updated to add that Mkongi is no longer deputy police minister. 

Botswana’s Shumba Energy has formed a joint venture with two Chinese companies to build a coal-to-liquids plant at a cost of between $1.5 billion and $2 billion, Chief Executive Officer Mashale Phumaphi told Reuters.

Botswana has abundant coal reserves of around 212 billion tonnes but currently imports all its fuel needs of 1.2 billion litres per annum.

Shumba has over the last few years progressed from being an exploration company to an energy development company.

It sits on over 4.5 billion tonnes of thermal coal reserves in Botswana’s eastern coal fields.

Shumba will hold an 80% stake in the joint venture, CoPet, with partners PowerChina International Group, part of state-owned Chinese firm PowerChina, and Wison Group. 

The coal-to-liquids plant is expected to produce 20,000 barrels per day of diesel and 5,000 barrels of gasoline per day when it is completed.

“Our primary objective is import substitution, and to this end we have already had fruitful discussions with the largest fuel retailers in Botswana for off-take,” Phumaphi said. 

Up to 75% of the capital expenditure for the plant could be financed by debt, with Shumba hoping to use its relationship with Power China International and the Wison Group to borrow from Chinese lenders, he said.

The coal-to-liquids plant would require 3.2 million tonnes of coal per annum, which will be supplied by Shumba’s Mabesekwa coal mine, currently under development.

Shumba aims to reach financial close on the project in the next two years, with construction taking a further four years.

-Reuters

Old Mutual Ltd will launch its second share buyback of the year on Sept. 3, South Africa’s second-largest insurer said on Monday after posting a 10% rise in half-year profit.

The company will buy back up to 2.4 billion rand ($157.51 million) worth of shares subject to market conditions.

“The board believes that the share price is trading at a discount to its intrinsic value and is of the view that a share repurchase programme will deliver longer term incremental value to shareholders,” Old Mutual said.

In the past few years, the 173-year-old company has broken up an international conglomerate structure to return to its roots as an African financial services group with its primary listing in Johannesburg. 

Shareholders had hoped this homecoming would bolster the value of the group’s stock, but instead it has dropped amid a damaging public dispute with sacked Chief Executive Officer Peter Moyo.

Shares have lost around 18% since the company suspended Moyo in May. Old Mutual fired him in June, but he has been temporarily reinstated by a court - a decision the insurer is appealing.

The company launched a buyback programme at the end of its last financial year in March, again intended to placate shareholders after a more than one-third drop in its share price since a listing in June 2018.

Adjusted headline earnings per share (HEPS) stood at 109.1 cents in the six months to June 30, compared with 98.9 cents a year earlier, Old Mutual said. 

HEPS is the main profit measure in South Africa that strips out certain one-off items.

-Reuters

South Africa’s Standard Bank has taken a stake in local fintech firm Nomanini to offer credit to potentially millions of small shop owners and other informal retailers across Africa that have limited access to banking services.

Africa’s biggest bank by assets has invested $4 million in Nomanini, which connects informal merchants with distributors via an e-wallet, and aims to roll the service out across 14 African countries by early 2021.

Nine out of 10 retail transactions in Africa are conducted in cash or via informal channels like kiosks and open-air markets, according to a 2017 report by audit firm Deloitte.

Using Nomanini technology, Standard Bank will collect and analyse data on the retailers. Adrian Vermooten, Standard Bank’s head of digital in Africa regions, said data on just one primary product line, such as pre-paid airtime, was enough to proxy the risk associated to that shop, build up a financial profile and understand its ordering patterns.

This will allow the bank to pre-empt the trader’s re-stocking needs and send them alerts offering to arrange and underwrite its next order, for instance.

This could be done via Nomanini or Standard Bank devices supplied to the traders or by leveraging other existing networks or devices from third parties - whatever fits best in each market.

Vermooten pointed to tens of thousands of informal traders who currently act as mobile money agents in African countries. “Those are all small little businesses that we find really attractive,” he said.

At a later stage, the bank will look to help those retailers offer financial services, like cash deposits and withdrawals, to their customers.

Vahid Monadjem, founder and CEO of Nomanini, said even just 100,000 retailers could reach between 50 million and 150 million people.

Standard Bank hopes that its licences to lend and offer other products, such as insurance, will give it the edge over mobile operators that currently dominate financial services in markets like Kenya.

Kenyan telecom company Safaricom has pioneered offering Kenyans without bank accounts a network to transfer cash via mobile phones with its M-Pesa mobile payment service platform.

Standard Bank will also face competition from traditional rivals such as FirstRand, which has also teamed up with a fintech firm to target informal businesses.

New players are entering the fray too. Digital-only lender TymeBank, which launched this year, is planning to offer business accounts, while a bank set up by money transfer service Hello Paisa and lender Sasfin is specifically targeting informal retailers.

Hello Paisa’s Managing Director Ahmed Cassim told Reuters in an interview on Monday that the bank, launched in June, would offer retailers point-of-sale devices in order to collect data that would allow it to sell them products like loans and insurance - a strategy similar to Standard Bank’s.

“I think the penny has dropped that the opportunity exists,” Cassim said, adding that moving a retailer away from cash also allows its customers to shift towards other methods of payment, further expanding the addressable market for financial services.

LONG-TERM OPPORTUNITY

Africa is the world’s second-fastest growing banking market, according to a 2017 McKinsey report.

Standard Bank and Nomanini will roll out their service in South Africa, Zambia, Mozambique, Malawi, Angola, Zimbabwe, Namibia, Ghana, Nigeria, Kenya, Tanzania, eSwatini and Lesotho. 

Other products it will offer the retailers include short-term savings and insurance.

Nomanini is open to partnerships with other banks elsewhere, but says its partnership with Standard Bank alone will give it substantial geographical reach and product range.

“The scale of the opportunity for Nomanini within Standard Bank’s footprint can keep us busy for a very, very, very long time,” Manadjem said.

-Reuters 

About us

African News Centre is an online media company, which strives to bring you the very latest African news.

Contact us

If you have any contributions contact us on email: This email address is being protected from spambots. You need JavaScript enabled to view it.
African News Centre | Postal Address | P.O Box 90455 | Klein Windhoek | Namibia | 9000