Kenya airways in trouble as loss deepen to US$74 million

Fuel, personnel and cost of aircraft remain top drivers of the airline’s costs

Kenya’s national carrier-Kenya Airways has posted a Ksh7.558 billion (USD74.6 million ) net loss for the year ended December 2018, as higher operating costs continue to eat into its improving revenues.

The airline which has changed its reporting period (end year) from March 31 to December 31, had a Ksh6.418 billion (USD63.5 million) loss in the 9-month period between April 1, and Dec 31, 2017.

This is despite the airline’s growth in total revenue for the 12 months which increased to Ksh114.45 billion (USD1.13 billion), compared to Ksh80.79 billion (USD789.7 million) for the nine month period ended December 31, 2017.

According to the management, fuel, personnel and the cost of aircraft remain the top three drivers of the airline’s costs, contributing to about two thirds of total operating costs.

“Fuel price volatility remains a major challenge for airlines around the world, and Kenya Airways is no exception,” Chairman Michael Joseph said as the carrier released its results on Tuesday.

According to KQ’s management, the price of oil per barrel saw an upward trend from the beginning of the year before reducing in the last three months of the year.

“As a result we saw our fuel costs rise by 73.6 per cent from Ksh19 billion (USD187.8 million) incurred in the nine months period in 2017 to Ksh33 billion (USD362.2 million) in the full year ended December 2018. The total cost of fuel in the 12-month period of 2017 was Sh25.5 billion(USD252.1 million), a 30 per cent increase,” Joseph said.

Fleet ownership costs also increased to Ksh18.9 billion (USD 186.9 million) from a restated amount of Ksh12.5 billion (USD 123.6 million) incurred in the previous nine months.

“The 2018 results are not directly comparable with the 2017 results as it is a representation of 12 months against the nine months in 2017. Were the 2017 results to be annualized, there would have been improvement in the results for the year,” the management notes in its financial statement for the year under review.

KQ has been struggling with loses since 2015 when it reported a Ksh25.7 billion loss (USD254.1 million). Things worsened in 2016 when the airline sunk deeper into losses reporting a loss of Ksh26.2 billion (USD259 million).

READ:Kenya Airways posts a $38.7 million loss in 2018 half year results

The carrier has however been making strides in improving its revenue stream through a number of initiatives, including additional routes.

Last year, growth in passenger revenue boosted its total revenues from Ksh63.9 billion (USD631.7 million) in the previous nine month period of 2017 to Ksh88.7 billion (USD876.9 million) in the year ended December 31, 2018.

Passenger numbers were 4.84 million at close of December 2018, while the nine-month period ended December 2017 recorded 3.43 million passengers. The airline achieved a cabin factor of 77.6 per cent (12 months compared to 76.2 per cent in the nine months of 2017.

In addition to the growth in passenger revenues, revenue from cargo amounted to Ksh8.68 billion (USD85.8 million) for the year 2018 compared to Ksh5.7 billion (USD56.4 million)  in the nine months of 2017.

“Kenya Airways continues to focus on delivering the turnaround programme that we embarked on in 2016. In the last year ended December 31, 2018, the capital optimization programme dubbed ‘project safari’  was completed. We have also undertaken various actions to ensure financial and operating efficiency to enhance business sustainability,” Joseph said.

KQ hired Polish CEO Sebastian Mikosz in 2017 to help turnaround the loss making carrier.

READ:Polish CEO Mikosz taxiing Kenya airways back to profit runway

The carrier is hoping its new routes, including the long haul Nairobi-New York route which commenced in October last year, will help boost its revenues as it works on its turnaround strategy.

ALSO READ:History made: From Kenya to New York with KQ’s inaugural direct flight

“We are on the right direction to turn this airline around and make it once more the pride of Africa,” Joseph had said last year when the carrier narrowed its losses to Ksh4 billion(USD39.6 million)  in half year to June 2018.

 

 

 

 

EAC to exploit the $1.2 billion continental market after AfCFTA ratification

Members of East Africa`s private sector including small and medium size enterprises are preparing to exploit the over Tshs.2.7 trillion ($1.2 billion) continental market after endorsement of African Continental Free Trade Area (AfCTA).

At their meeting in Arusha on Thursday 25th April,2019, members of East Africa Business Council (EABC) who teamed up with United Nations Economic Commission for Africa (ECA) said they foresee large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly Tshs.2.3 trillion ($1 billion) and job creation of 0.5 to 1.9 million

`Together African economies have a collective gross domestic product (GDP) of $2.5 trillion, making it the 8th largest economy in the world. That makes the continent much more attractive to investment, both from within and from outside the continent, ` said Andrew Mold, the acting Director of ECA in Eastern Africa.`This should encourage business people to take advantage of AfCFTA and make the investments necessary to sustain economic growth and create employment, ` Mold added.

EABC Chairman, Nick Nesbitt emphasized the importance of the continent having a clear vision to put an end to the fragmentation of the internal market. `I really applaud everybody who has been involved in creating the AfCFTA because their vision is the one of pan-Africanism,` Nesbitt said. `It is something our founding fathers aspired to. Our thanks to ECA for being at forefront of this conversation and pushing the agenda forward so that the continent becomes a single economic trading bloc, ` he added.

Speaking at the same gathering, Director General of Customs and Trade at the East African Community Secretariat, Kenneth Bagamuhunda cited the experience of regional economic communities as the building blocks for the AfCFTA.

`The AfCFTA should build on what has already been achieved in regional negotiations like the tripartite free trade area, as well as within our respective regional blocks, Bagamuhunda said. He also highlighted governments need to set a conducive environment for the successful implementation of AfCFTA.

The AfCFTA was signed in March 2018, at a historic meeting of the African Union in Kigali. 52 of 55 African Union member states have so far signed the AfCFTA (Eritrea, Nigeria and Benin are yet to sign the agreement) , 22 countries have ratified the agreement, which was the minimum number required for it to enter into force. Gambia`s parliament approved the AfCFTA on Tuesday 23rd April,2019, becoming the 22nd nation to do so, and effectively meeting the minimum threshold for the agreement to come into force.

The AfCFTA seeks to create the largest trade zone in the world, increase intra-African trade by 52% by the year 2022 and remove tariffs on 90% of goods.

Also read: Africa’s move to push for cheaper, faster trade

Kenya’s biggest trading partners, Uganda tops EAC

China dominates as Kenya’s top import source globally 

Uganda is Kenya’s biggest trading partner within the East Africa Community (EAC), latest data show, with China dominating the global scene.

The Economic survey (2019) shows total trade volumes (import and exports) between Kenya and Uganda in the year 2018, were valued at Ksh111.3 billion (USD1.09 billion).

Tanzania comes in a distant second with a total trade value of Ksh47.6 billion (USD468.9 million) while Rwanda is third with Ksh19 billion (USD187.2 million).

Trade with DR Congo, South Sudan and Burundi, mainly export markets for Kenya, were valued at Ksh15.2 billion (USD149.6 million), Ksh12.9 billion (USD127.1 million) and Ksh6.6 billion (USD65.02 million) respectively.

Uganda

During the year under review, Uganda increased the value of its exports to Kenya by 17.6 per cent to close at Ksh49.4 billion (USD486.7 million), from Ksh42 billion (USD413.8 million) in 2017.

READ:Uganda keen on enhancing exports to EA region

“The value of imports from Uganda rose largely driven by increased imports of maize, sugar, milk and animal feeds,” the Kenya National Bureau of Statistics (KNBS) has noted.

Kenya however exported more to her neighbour where total volumes were valued at Ksh61.9 billion (USD 609.9 million),a slight increase from Ksh61.8 billion (USD608.9 million).

Uganda exports to Kenya include wood and articles of wood, wood charcoal, fodder, mineral, cereals, dairy products, honey, edible products, sugars and sugar confectionery, coffee, tea, mate and spices, tobacco and manufactures tobacco substitutes among other products.

In return, Kenya exports salt, sulphur, earth, stone, plaster, lime and cement, mineral fuels, oils, distillation products, plastics, pharmaceutical products, vehicles, beverages, spirits and vinegar, soaps, lubricants, waxes, candles, modeling pastes among others.

Tanzania

The value of imports into Kenya from Tanzania increased by 3.5 per cent to Ksh17.8 billion (USD175.4 million) up from Ksh17.2 billion (USD169.5 million), mainly on live animals, cereals, beverages, spirits and vinegar, fertilizers, mineral fuels, oils, distillation products and textile articles.

Kenya exports to Tanzania on the other hands gained marginally to close at Ksh29.8 billion (USD293.6 million) from Ksh28.5 billion (USD280.8 million), despite the existing tariffs and Non-Tariff Barriers (NTBs) between the two states.

READ:Kenya, Tanzania mistrusts ripping apart the EAC

Last year, the two EAC member states were entangled in a trade war after Dar es Salaam denied unrestricted entry of Kenyan made chocolate, ice cream, biscuits and sweets entry into its market.

Nairobi retariated by imposing new tariffs on Tanzania products such as flour with both breaching the EAC common market protocol, which allows free movement of locally manufactured goods.

Presidents Uhuru Kenyatta and John Magufuli have on several occasions directed their ministers to resolve outstanding trade disputes, to pave way for increased trade between the two countries and the region as a whole.

ALSO READ:Why Magufuli, Kenyatta are worried over Kenya-Tanzania borders

Rwanda and the rest of EAC

The President Paul Kagame led country lost ground on its exports to Kenya where the value dropped by 29.4 per cent to close at Ksh1.2 billion (USD 11.8 million) from Ksh1.7 billion (USD16.7 million) in 2017.

This is expected to further dwindle based on the recent tiff with Uganda which has led the closure of borders, with Uganda being the main transit route between Kenya and Rwanda.

Kenya’s exports to Rwanda however surged to Ksh17.8 billion (USD175.4 million) from Ksh17.1 billion (USD168.5 million) in value.

Those to DR Congo, South Sudan, and Burundi however dropped to Ksh15.2 billion (USD149.6 million), Ksh12.9 billion (USD127.1 million) and Ksh16.8 billion (USD165.5 million), from Ksh18.9 billion (USD186.2 million), Ksh6.6 billion (USD 65 million) and Ksh7.4 billion (USD72.9 million) respectively.

“This was occasioned mainly by the political instability in these regions,” a trade expert told The Exchange.

EAC and Africa

Kenya’s total imports (value) from her EAC peers totaled Ksh68.4 billion (USD 673.9 million) an upward trend compared to Ksh60.9 billion (USD 600 million) the previous year.

READ:EAC bloc has made significant gains in reducing trade bottlenecks

The East Africa economic power house however lost ground on her exports to the regional markets where the total value dropped 1.9 per cent to close at Ksh129 billion (USD1.27 billion), from Ksh131.6 billion (USD1.29 billion) the previous year.

In the continent, South Africa topped as Kenya’s biggest trading partner with the trade being in favour of the southern country.

This is on the Ksh64.7 billion (USD637.4 million) worth of imports from SA up from Ksh61.9 billion (USD609.8 million), against exports valued at Ksh4.4 billion (USD43.3 million). Kenya however gained 57.1 per cent from Ksh2.8 billion (USD 27.6 million) a year earlier.

Other notable trading partners in Africa include Egypt where the country exported to, goods worth Ksh201. Billion (USD198 million), and Somalia whose imports from Kenya in the year amounted to Ksh15.1 billion (USD148.8 million).

Imports from Swaziland were valued at Ksh8.6 billion (USD84.7 million) a drop from Ksh11.2 billion (USD110.3 million ) in 2017, while those from Zambia closed the year at Ksh6.9 billion (USD67.9 million) after dropping from Ksh7.7 billion (USD75.8 million).

Mauritius, another key trading partner exported goods worth Ksh6.1 billion (USD 60.1 million) to Kenya, a drop compared to Ksh7.3 billion (USD 71.9 million) in 2017.

During the year, total imports from the African market were valued Ksh205.9 billion (USD 2.03 billion) a slight increase from Ksh200.5 billion (USD 1.98 billion) the previous year.

That of exports however dropped slightly, by 3.4 per cent, to close at Ksh216.2 billion (USD 2.13 billion) compared Ksh223.9 billion (USD 2.21 billion) the previous year, meaning Kenya lost its export market share in intra-Africa trade.

China and the World

China continues to dominate as the top source of imports into the country in the global scenario, despite losing five percentage points on its trade with Kenya last year.

READ:US-China rivalry to shape Kenya, Africa’s foreign policy in 2019

According to the survey released this week, imports from china were valued at Ksh370.8 billion (USD3.65 billion) in 2018, a slight drop from 390.6 billion (USD3.85 billion) the previous year.

India comes in a distant second where imports from the Far East nation totaled Ksh185.3 billion (USD1.83 billion). This was however an increase from Ksh170.4 billion (USD 1.68 billion) worth of imports into the country in 2017, mainly on account of medicinal and pharmaceutical products.

The drop in the value of imports from china is seen as a result of reduced importation of machinery and equipment, related to the construction of the standard gauge railway, whose phase two-Nairobi-Mai Mahiu is 91 per cent complete.

Major Chinese imports to Kenya include machinery, electronics, motorcycles, motor vehicles spare parts, furniture and clothes.

Other top import sources for the country are Saudi Arabia and the United Arab Emirates (UAE), where total imports were valued at Ksh172.7 billion (USD 1.70 billion) and Ksh147 billion (USD 1.45 billion ) respectively.

The Asian continent remains the top source of imports into the country having closed at a total of Ksh1.168 trillion (USD 11.5 billion) in value last year.

It is followed by Middle East whose imports closed the year at Ksh355.7 billion (USD3.50 billion).

Imports from Europe and the US were valued at Ksh292.6 billion (USD2.88 billion), and Ksh85.9 billion (USD846.3 million) respectively last year.

READ ALSO:How Trump will beat China in Africa

Exports to china last year were valued at a paltry Ksh11.1 billion (USD 109.4 million) with the total exports to Asia closing at Ksh180.9 billion (USD1.78 billion).

“The increase in exports to Far East was largely due to significant improvement in exports to India, China, Thailand and Afghanistan,” KNBS notes in its survey.

According to the official government statistics, trade balance widened by 1.4 per cent to a deficit of Ksh1.147 trillion (USD11.30 billion) in 2018, from a deficit of Ksh1.131 trillion (USD 11.14 billion) in 2017.

“The growth of exports weakened in 2018 compared to the strong performance recorded in 2017, as increased uncertainties in the global trade led to constrained external demand,” KNBS Director General Zachary Mwangi noted during the release of the survey in Nairobi.

Kenya’s top exports include tea, horticulture, articles of apparel and clothing accessories, coffee, titanium ores and concentrates, collectively accounting for 62 per cent of the total domestic export earnings.

“The rise in exports was mainly as a result of increase in exports of horticultural products, while the slowdown in import growth was attributable to decline in imports of food due to favourable weather conditions as well as a reduction in the value of machinery and transport equipment imports,” Mwangi said.

The government has prioritized growth of the manufacturing sector, under the big four agenda, with a key focus on value addition on local produces, as it seeks to bridge the trade deficit and increase the sector’s contribution to the GDP.

“We have been implementing various initiatives to support manufacturers. This includes cutting by half the cost of electricity for industries,” National Treasury CS Henry Rotich said.

READ:Five ways Kenyan government bets will boost manufacturing sector

UK firm kicked out of Nairobi Securities Exchange

It was suspended from trading at the NSE in May 2017

Troubled logistics firm-Atlas Development and Support Services (ADSS) has been delisted from the Nairobi Securities Exchange (NSE) .

The delisting took effect on April 25, bringing to an end a five-year stint at the Nairobi bourse.

Registered in Guernsey, UK, in 2002, Atlas was admitted to trade at the NSE in December 2014, where it was cross-listed in the London Stock Exchange (LSE)’s Alternative Investment Market (AIM) segment.

In December 2015, the firm decided to close its operations in Kenya, placing its Kenyan subsidiaries into liquidation by way of a Creditors Voluntary Liquidation after financial headwinds.

The firm had hoped the closure of the Kenyan subsidiaries, Ardan Logistics Kenya Ltd, Ardan (Medical Services) Ltd and Ardan (Civil Engineering) Ltd, would improve the group’s overall cost base.

Two years later (May 2017), it was suspended from trading at the NSE following resignation of its Kenyan nominated advisor I&M Burbidge Capital.

The Nairobi move came after the firm had been delisted at the LSE in the same month, following the resignation of its Nominated Advisor, Stifel Nicolaus Limited.

READ:Atlas suspended from trading at LSE

NSE chief executive officer Geoffrey Odundo had then attributed the decision to the firm’s “unresolved issues at the London Stock Exchange” where it had been suspended following the resignation of its nominated adviser.

Atlas had also failed to prepare and publish its financial statements from December 31, 2015 to date, hence failing to comply with the continuing listing obligations.

The Nairobi headquartered logistics firm also did not have a Kenyan nominated advisor, and no updates have been made by the company to the shareholders and the general public regarding their closing down process.

“Notice is hereby given on the mandatory delisting of Atlas Development and Support Services from the Nairobi Securities Exchange (NSE) effective April 25, 2019,” NSE said in a statement on Friday.

“This follows the closing down of the company’s operations; the deregistration of the company in its country of incorporation under the Guernsey laws and failure by the company to adhere to regulatory requirements from the year 2017 when the security of the company was suspended from trading on the NSE,” the bourse added in its public notice.

The delisting has been approved by the Capital Markets Authority (CMA).

It now winds up Atlas’s existence in the Kenyan market, a blow to investors and shareholders who had hoped of its possible turnaround or listing in another stock.

The firm has had previous troubles including tax evasion claims in Ethiopia, a market it had entered through the acquisition of TEAP Glass.

The Ethiopian Revenue and Customs Authority seized USD2.4 million from the subsidiary’s account to clear the tax liability.

The Nairobi-headquartered support services and logistics company was listed on the Growth Enterprise Market Segment (GEMS) of the NSE, after it had (then) raised USD5 million through a private placement to Kenyan investors.

According to the then CEO Carl Esprey, the firm had hoped to tap the growing opportunity in the region as well as leverage on local content.

“The strong interest from Kenyan investors is recognition of the opportunity to create a world class development and support services provider in Eastern Africa,” Esprey had said during the listing.

ALSO READ:How NSE is preparing small companies for listing at the bourse

 

 

 

PEWIN CABS invests Ksh100 million in Kenya, rebrands to PTG Travel

It has invested Ksh100 million to grow its fleet

Pewin Cabs has officially rebranded to PTG Travel in a bid to increase its market share by offering diversified service in the Kenyan market.

The firm, which is now moving beyond cabs after 10 years, was among the first to launch its cab-hailing App in 2013, a move that contributed significantly to corporate transport solutions in Kenya.

Speaking at the launch of PTG Travel, Managing Director Justus Kirigua, said: “We are excited about the opportunities the new brand offers us.  The transition to PTG Travel is anchored on a three-year growth strategy which includes a Ksh100 million investment to grow our fleet and increase our services to include Bus services, VIP Services and Charter Flight.”

The sum invested translates USD986,232.

Mr. Kirigua has since assured the existing customers that even with the identity change, the firm will continue to deliver greater convenience to clients.

“To help our clients manage their logistics costs, we have enhanced our APP for increased transparency and accountability,” Kirigua said.

Nairobi County Roads, Transport and Infrastructure Executive Hitan Majevdia who graced the event said:”We are proud of PTGs strategy to innovate the transport sector in Kenya. Services like corporate transport sharing and Air Charter will greatly enhance road safety and ease congestion on our roads.”

PTG Travel is eying to enter two East African countries using its current corporate client franchise model in the near future, Kirigua said , as the company seeks to transform corporate transport landscape in Africa.

The move to rebrand comes at a time when tourism numbers continue to improve in the country thus increasing demand for tourism travel.

Last year, number of international arrivals hit 2, 025, 206 compared to 1, 474, 671 in 2017, an increase of 37.33 per cent.

Moreover, foreign companies continue to show interest in setting up shop in the country due to the continued government’s efforts in improving ease of doing business in the country.

Last year, over 20 new UK companies announced plans to set up in Kenya during UK Prime Minister Theresa May visit in the Country.

Speaking about the opportunity to give back to the community, Mr. Kirigua concluded:”There are different modes of transport, and majority of people in our country actually walk to their places of work. We need to improve the walk paths, and make provision for bike lanes. This is something PTG would love to do as part of CSR for the industry.”

ALSO READ:Investing in Kenya’s logistics space

One Urban Garden; the road to Africa’s food security

The venture is keen to achieve food security, income generation, healthy living and environmental awareness

It is early morning in the outskirts of Kenya’s capital, Nairobi. A group of three young people are working in a field, using hoes to remove plastic bags and other solid waste from the soil in preparation for crop planting.

Together with other youth, they are raising seedbeds of vegetables such as kale, cabbage, spinach, carrots, onions, green peppers, tomatoes, and other commonly consumed vegetables in Kenya.

The seedlings will later be transferred to gardens and irrigated for several weeks before the vegetables are supplied to clients in households and restaurants within Nairobi.

The trio are Mastercard Foundation Scholars, selected for their academic talent, social consciousness, and leadership qualities.

Mutoni Shadadi  from Rwanda, and her colleagues Laetitia Mukungu and JacquilineMaina, from Kenya, are pursuing their studies in agricultural sciences at EARTH University in Costa Rica.

Mastercard Foundation Scholars have formed One Urban Garden, a social venture that gives people an opportunity to engage in the food production process, enhance the farm-to-table value chain,and demonstrate self-sustenance on a small piece of land. The group targets to help Kenya and the East Africa region achieve food security.
From Left: Mutoni Shadadi, Jacqueline Maina and Laetitia Mukungu during the Resolution Social Venture Awards in 2018.

Together, they formed One Urban Garden, a social venture that gives people an opportunity to engage in the food production process, enhance the farm-to-table value chain,and demonstrate self-sustenance on a small piece of land available.

One Urban Garden will provide fresh vegetables to the clients, acting as a training centre and an incubator for job opportunities involving youth.

One Urban Garden aims to provide youth with training in agriculture and agribusiness.The social venture envisions achieving food security, income generation, a healthy lifestyle and environmental awareness-raising among urban dwellers in Nairobi.

“We envision One Urban Garden as a hive of production and service provision. We are planning to start with vegetable production, which will include kale, peppers, and spinach and be readily available for household consumption. The second phase of production will be the introduction of rabbit farming and greenhouse production mainly targeting restaurants. Once the centre is established, six youth will undergo a 21-week training program and they will be in direct contact with our clients as consultants” said Shadadi.

Expected to be fully operational by end of this month (April 2019), One Urban Garden will first identify the farmers and provide training to those that need it.

The Scholars are currently looking for partners and available land in Nairobi and investing much time in studying other similar models, especially from other developing countries.

To serve a larger clientele in Nairobi, One Urban Garden will create several farms in different locations.

“We plan to move in phases and our target for the first phase is to have 25 farmers as our base, as well as a couple of restaurants. As variety is one of our selling points, the prices will vary depending on demand and we plan to make the prices more affordable as we grow.We estimate that farmers will pay 50 dollars for the training each year, and we hope that one day we might take on a big project from a hotel or institution. We are also considering the option of installment payments,” said Laetitia.

One Urban Garden won the Resolution Social Venture Challenge in 2018, a competition that rewards compelling leadership and promising social ventures led by youth.

These young leaders earned a fellowship that includes seed funding, mentorship, and access to a network of young global change-makers to pursue impactful projects in their communities.

Mastercard Foundation Scholars have formed One Urban Garden, a social venture that gives people an opportunity to engage in the food production process, enhance the farm-to-table value chain,and demonstrate self-sustenance on a small piece of land. The group targets to help Kenya and the East Africa region achieve food security.
The Trio

A collaboration between the Mastercard Foundation and The Resolution Project, the Resolution Social Venture Challenge provides a pathway to action for socially responsible young leaders who want to create change that matters in their communities.

Shadadi, Laetitia, and Jacquiline want to use urban farming to motivate African youth who think farming is a dirty job and only meant for people living in rural areas.

“It feels great being a Resolution Social Venture Challenge winner because it proves to me that we have the potential to contribute to change in the world. Being a Mastercard Foundation Scholar makes me feel like a winner because I get a chance to accomplish my dreams and also share them with my community as I give back,” said Shadadi.

Jacquiline said she is overjoyed and is very proud of her team.

“We have started working on the business strategy and sometimes that gets a bit overwhelming, but the teamwork is great and I learn more each passing day. I am also very grateful for this opportunity.”

Laetitia said that being a Resolution Social Venture Challenge winner is both a blessing and a challenge to keep pushing until One Urban Garden starts making a difference in the lives of Nairobians.

“I am thankful to the Mastercard Foundation because it not only gave me the opportunity to pursue my career but also to fulfill my interests and goals, and expand my network.”

The ambitious group’s initiative is just but one example that can go a long way in helping President Uhuru Kenyatta achieve his food security plan under the Big Four Agenda.

READ:EAC to launch platform to promote food security and nutrition

READ ALSO:Kenyan President Uhuru Kenyatta Tackling Food Insecurity as part of his Big Four Plan

 

Tell-Em PR appoints Joel Chacha as new General Manager

Joel will manage Tell-Em PR’s operations and client portfolio

Tell-Em Public Relations, one of Kenya’s leading Public Relations firms, has appointment veteran PR practitioner Joel Chacha as the agency’s new General Manager effective April 1, 2019.

Joel brings over 10 years of experience in developing and implementing successful communications and digital strategies.

“We are very pleased to announce the appointment of Joel Chacha as Tell-Em PR’s General Manager. Joel’s broad mix of strategy, crisis communication and media relations experience will be a fantastic addition to our agency’s Top Executive Team,” said Tell-Em PR’s Managing Director Elizabeth Cook.

Mutahi Kagwe, Tell-Em PR’s chairman, added:“On behalf of our Board of Directors, I welcome Joel Chacha to his new position. He brings a wealth of knowledge in strategic planning and business development.”

Joel has spent the last few months at the agency overseeing an aggressive client acquisition through strategic pitches and leveraging on his social capital, to date the company manages leading brands such Procter and Gamble, British Airways, Sanofi, Bolt – the riding hailing app,Coca-Cola Beverages Africa and Glovo.

READ:Investing in Kenya’s logistics space

“It is a tremendous opportunity to join the Tell-Em PR Management team. I am fully committed and eager to help the agency continue to execute on its public relations services and operational goals within this region,’’ Chacha commented.

He has a track record of success in leveraging the best-in-class communications to help companies differentiate and distinguish themselves and enhance their credibility.

His industry work and experience includes Coca-Cola Beverages Africa, Coca-Cola, Procter and Gamble, Safaricom, Visa, Kenya Airways, Taxify, Direct Pay Online, Weetabix, SC Johnson, Glovo, Bio-Oil, Kim-Fay, Alexander Forbes, Prudential Life Assurance Kenya, Heritage, and Liberty and The Institute of Chartered Accountants in England and Wales (ICAEW) just to name a few.

He holds a Bachelor of Arts in journalism from the United States International University – Africa and is currently pursuing a Master of Arts in Communication concentrating on strategic corporate communication from the same institution.

Tell-Em Public Relations was established in 1999 and has grown to become one of the leading PR agencies in East Africa. With offices in Kenya and affiliates in Tanzania, Uganda and Rwanda, the agency offers communications support across the region.

Tell-Em Public Relations is an award-winning agency and has won nine awards from PRSK – the Public Relations Society of Kenya, over the years, including Best Agency and Best Media Campaign. The most recent award was for the agency’s work on the mVisa launch where it won Best Media Campaign and Best Overall Campaign in the 2016 PRSK awards.

The agency includes a strong team of communications professionals, most of whom have worked in the media, have an in-depth understanding of how the media works and are able to package content and leverage their connections to give clients the best possible media positioning.

 

 

US firm cements African business with Ksh7Bn factory in Kenya

The factory can produce about 7.8 billion pellets of chewing gum annually

US headquartered Mars Wrigley Confectionery has cemented its business in the East and Central Africa region with the new state of the art Ksh7billion (USD68.9 million) manufacturing plant in Athi River, Machakos County, Kenya.

The plant was officially commissioned by President Uhuru Kenyatta on Tuesday. The President was represented by Industry, Trade and Cooperatives Cabinet Secretary Peter Munya.

Kenyatta has since hailed Mars Wrigley for putting up the new factory citing the need to invest in additional manufacturing capacity to create more jobs for Kenyans.

The investment gels well with his ambitious Big Four Agenda’s manufacturing pillar that seeks to increase manufacturing’s contribution to GDP from the current 8.5 per cent to 15 per cent by 2022.

“To create the desired jobs, we need to invest in existing and new industries that will grow our country’s manufacturing capacity from the current eight-point four percent to fifteen per cent of the Gross Domestic Product by 2022,” President Kenyatta said in a speech read on his behalf by CS Munya.

He added that the government was particularly keen on working with the private sector to achieve that goal.

“My administration remains committed to catalyzing even more private-sector-led growth in the manufacturing sector,” the President said.

The new factory which is constructed on a 20-acre piece of land in Mavoko, Machakos County has replaced the company’s old plant that was located in Nairobi’s Industrial Area.

According to the company’s management, investment in a new facility whose construction started three years ago, was driven by the need to meet growing demand for the firm’s products in Africa, while improving capacity and technology.

READ:Americans to build $70M chewing factory in Kenya

“With the rapidly expanding middle class and youthful population, we see our products becoming more and more integrated into people’s lifestyles.” Said Mr. Duncan McCulloch, Regional Managing Director for Mars Wrigley Confectionery.

The facility is expected to have a major impact on the Kenyan economy in terms of job creation both directly at the factory and indirectly through its expansive value chain a

US manufacturer Mars Wrigley Confectionery has cemented its business in the East and Central Africa region with the new state of the art Ksh7billion (USD68.9 million) manufacturing plant in Athi River, Machakos County, Kenya. It will serve a growing market of more than 14 countries - that includes Uganda, Tanzania, Rwanda, Burundi, Ethiopia, Djibouti, DRC and South Sudan. The new factory will produce popular Mars Wrigley Confectionery brands, including Big G, PK, Doublemint and Juicy Fruit.
The main block at Mars Wrigley Confectionery’s new factory in Kenya.

s well as boosting the country’s exports.

It will serve a growing market of more than 14 countries – that includes Uganda, Tanzania, Rwanda, Burundi, Ethiopia, Djibouti, DRC and South Sudan.

Mr. McCulloch commended President Kenyatta for his efforts in boosting local manufacturing through his government’s Big Four Agenda saying it will contribute to the expansion of employment and business opportunities for Kenyans, while cementing the country’s position as a leading industrial hub in Africa.

“Increased capacity and efficiencies made possible by this new facility will contribute significantly to the scaling up of our already existing entrepreneurship program. So far, over 1,000 youth and women from across the country have benefited from the program we call Maua. With the support from government and other partners, we hope to increase the number to 5,000 in the next two years,” Added McCulloch.

Maua is the company’s entrepreneur accelerator program designed to empower individual entrepreneurs as well as create large networks of micro-entrepreneurs and micro-distributors.

“As government, we remain committed to supporting local industries as part of the Big Four agenda under the manufacturing pillar. Our intention is to transform the country into a competitive global economy and improve the lives of Kenyans.” said President Kenyatta.

He added that the company’s decision to invest in Kenya on such a substantial scale is a clear affirmation of the country’s position as an attractive investment destination.

Mars Wrigley Confectionery is a global leader in the manufacture of chewing gum, confections and chocolates. The new factory will produce popular Mars Wrigley Confectionery brands, including Big G, PK, Doublemint and Juicy Fruit. Additionally, the company will also look to expand a wide range of their chocolate portfolio in the market.

The factory has the capacity of producing about 7.8 billion pellets of chewing gum annually.

Just recently, the new factory was recognized for adopting green building strategies and practices in its design and construction, becoming the first manufacturing plant in Eastern Africa and one of the few in Africa to achieve LEED GOLD certification status.

LEED, or Leadership in Energy and Environmental Design, is the most widely used green building rating system in the world. It is run and managed by the U.S. Green Building Council (USGB), a non-profit organization that promotes sustainability in building design, construction, and operation. It is a prestigious rating for environmentally conscious buildings and sites.

Mars Wrigley Confectionery is the world’s leading manufacturer of chocolate, chewing gum, mints, and fruity confections. Once the planned worldwide integration of the Mars Chocolate and Wrigley businesses is complete, Mars Wrigley Confectionery will employ over 34,000 Associates globally and have operations in approximately 70 countries.

Headquartered in Chicago, Mars Wrigley Confectionery will distribute its world-famous brands including M&M’s, Snickers, Twix, Skittles and Orbit in more than 180 countries.

In Kenya, the company has its headquarters in Athi River and has been operational since 1969.

 

Investing in Kenya’s logistics space

Delivery has become the in-thing in the market. Customers nowadays don’t have to go to the shops but can just order, make a payment (either before or on delivery) and receive their orders at home, in the office or have them delivered wherever they want. The Exchange spoke to Glovo, a startup founded in 2015 in Barcelona, and launched in Kenya in February this year. The service is present in over 20 countries and more than 100 cities. With over 10 years in business development, seven of which have been in the tech world, Glovo Market Lead (Sub-Saharan Africa) Priscila Muhiu divulges into the logistics business in Kenya and the region.

 

What makes the logistics space in Kenya an attractive prospect and why is Glovo in this business?

Logistics is the key driver to any economy. Without logistics, businesses will not be able to get their goods to their consumers. Logistics powers economic growth and can unlock the potential of businesses. At Glovo, we believe that users should have access to their own city immediately and with ease by bridging the gap between consumers and the local economy. Consumers can use Glovo to get anything delivered to them in minutes while at the same time, businesses have access to thousands of customers who use the Glovo app. A report by the World Bank indicated that logistics costs account for over 30% of the total cost of goods. To lower these costs, increasing efficiency is paramount. Leveraging on technology can help organizations to increase efficiency and lower the costs of goods

With the recent negative coverage around the local bodaboda industry, along the lines of national security, what do you do to ensure that you enlist riders with clean criminal records?

Our riders go through a vetting process to ensure that they have no criminal record. We then get them trained on customer service and etiquette to ensure good customer experience. We also have a rating system that enables users to give us feedback on the riders ́ behaviour.

Being a multi-category delivery app has required you to get into partnerships with relatively unknown local brands. What does this model mean for both parties involved?

The partnership creates a win-win situation. The Brands get access to thousands of users that come to the app hence increasing their sales and lowering their marketing costs. In return, Glovo earns a commission by connecting it´s users to the local brands hence increasing the company revenue

Based on your experience in the market so far, what would you say are the challenges of doing business in the region?

The logistics infrastructure in Kenya is still not up to the global standard, though it is improving. The increasing cost of fuel poses a challenge and by extension increases the cost of transporting goods. Also the lack of proper address systems also creates friction in the delivery of goods. The delivery service providers are forced to make a couple of calls before getting to the destination. However, this has greatly improved over time

What makes you so sure that you will succeed within this market?

Our unique value proposition is that we are a multi category platform hence use cases are many. Users can get anything from food, groceries to drinks delivered to them in minutes. Users dont need to have separate apps for food, groceries or courier. They just need to download one app, Glovo, and they will experience convenience at its best.

What is your view on the current operating environment in the industry in Kenya?

The current operating environment is conducive for business growth. However, the cost of branding a bike is very high and doesn’t ́t make economic sense to the delivery companies. The key players in the industry are currently trying to lobby with the county government to lower the costs.

How do you plan to deal with competition from other logistics service providers within the local space?

Our focus is on our consumers and we seek to constantly meet the consumer needs. We believe that with our unique value proposition and exception customer experience, we can stand out from the competition.

Going forward what role are you going to play in the local logistics industry?

Glovo seeks to make everything available by connecting Kenyans with their local economy. To enable this, Glovo relies on two main pillars;

  1. a) Partnering with a wide variety of establishments including; top fast food restaurants, local food restaurants, Groceries, bakeries and gift shops
  2. b) bike riders, who are trained to provide efficient delivery service in minutes.

The economic impact expected from this is that riders will increase their earnings and get to service more orders. At the same time, businesses will have access to more customers and hence increase their sales. The overall impact will be local economy growth and access to opportunities.

 

Why Kenya will not collect taxes from sports betting

The Kenya Revenue Authority (KRA) has hit a technical snag in its efforts to collect taxes amounting to more than Ksh2.7 billion (USD26.6 million) per month, accruing from betting wins.

This follows a court order issued by a magistrate’s court barring the taxman from accessing the monies.

The orders issued by Senior Resident Magistrate D.M. Kivuti sitting at the Milimani Commercial Courts (Nairobi) have stopped the operations of crucial Income Tax Act sections (Sections 2, 10, 34 and 35), effectively rendering KRA unable to collect the levies,  earmarked for national development projects.

This is per the budget  for the current financial year ending June 30, where  National Treasury Cabinet Secretary, Henry Rotich, had planned to have  taxes drawn from betting activities finance sports, art, cultural developments and the rollout of the Universal Health programmes.

The order issued by Senior Resident Magistrate Kivuti follows the 2014 filing of a suit by a Mr. Benson Irungu against Sportpesa Ltd trading as Pevans East Africa.

The suit sought to stop Sportpesa from deducting and remitting taxes arising from Mr Benson Irungu and any other person’s winnings.

Aggrieved by an earlier order stopping Sportpesa from deducting withholding tax on winnings from betting, KRA which had not been party to the case sought to be enjoined as an interested party while seeking to set aside the earlier orders.

The orders were subsequently overturned on March 29, 2019 allowing KRA to continue collecting due taxes from Sportpesa among other betting companies.

However, in a surprising and frustrating turn of events for KRA, Mr Benson Irungu moved to court a fortnight ago seeking orders for the stay of execution against the orders granted last  March 29,  by Senior Resident Magistrate Isaac Orenge.

The new orders by Senior Resident Magistrate D. M. Kivuti were heard and issued in KRA’s absence and were only brought to the authority’s attention last week Thursday (April 18).

KRA’s counsel led by Acting Commissioner Legal Services, Mr Paul Matuku and assisted by David Ontweka and George Ochieng, have however managed to file their responses and submissions seeking that the orders granted by Senior Resident Magistrate D. M. Kivuti be vacated pending the hearing of the inter-partes case.

At this week’s hearing, advocates appearing for Mr Irungu requested the Court for more time to file their replying affidavits following KRA’s submissions.

The Senior Resident Magistrate D. M. Kivuti however declined to vacate the orders issued on April 11, 2019, directing all parties to file their responses and appear for hearing on Monday next week (April 29).

READ:Increasing Tax on Betting firms Bad for Kenya