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Kenya committed to AU trade pact even with US deal, says Uhuru : The Standard

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Kenya remains committed to the African Continental Free Trade Agreement (AfCFTA) despite forging a new trade deal with the US.

This was President Uhuru Kenyatta’s (pictured) message for the African Union as he sought to reassure regional partners that the deal with the US could serve as a model for other African states.  

“We are keenly looking forward to concluding the trade arrangement between our countries and I believe these trade agreements would not only serve Kenya and the US but would probably set the base for a new engagement between the US and other African countries,” said Uhuru during his visit to Washington.

SEE ALSO :Kisumu woman in distress after bulls electrocuted

Uhuru was speaking after meeting US President Donald Trump at the White House where the two leaders agreed to begin talks that will lead to a trade pact between Kenya and the US.

President Kenyatta then met with 350 business leaders attending a US-Kenya Trade Forum in the US capital stating that the agreement with the US would compliment regional efforts by African countries to kick-start AfCFTA.

“At this juncture, I want to put away a few doubts because there has been a feeling that by Kenya engaging with the US to have a trade arrangement, we are running away from our commitment to the African Continental Free Trade arrangement,” he said. “I want to assure you that there can be nothing further from the truth as that is definitely not the case.”

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This comes even as the African Union is pushing to have a continent-wide trade pact with the US, instead of individual bilateral deals once the Africa Growth Opportunities Act (AGOA) lapses in 2025.

Ambassador Albert Muchanga, AU’s Commissioner for Trade, last year said the AU would opt for a continent-wide trade deal with the US, with the much-anticipated AfCTA billed as the best bet.

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“Fragmentation in Africa brings with it small economies, small markets, uncompetitiveness and a host of other weaknesses which make African economies fail to grow at rates high enough to reduce poverty and overcome the underdevelopment trap that they find themselves in,” said Ambassador Muchanga at the Africa Business Summit in Chicago Last year.

“With this structural weakness, our countries are also vulnerable to manipulation, politically and commercially,” he said.

According to Kenya Association of Manufacturers (KAM), the trade deal with the US has an opportunity to increase trade volumes to the US and breathe new life into the stagnant manufacturing sector.

“Any free trade agreement provides a raft of opportunities for any country, including large markets, larger supply base and lower business costs,” said KAM chief executive Phillis Wakiaga. “AGOA has benefited a lot of local industries, especially textiles and apparel industries and with the deal coming to an end in 2025, the free trade agreement between Kenya and the US will push Kenya to consider its competitiveness in such negotiations.” 

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However, Wakiaga said Kenya needs to improve efficiency in local value chains for the manufacturing sector or lose out.

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“For example in the case of AGOA we have traditionally used about 10 per cent of the product lines available to us and we need to ensure Kenya is prepared once a deal is in place,” she said. 



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KenyaAfrican Continental Free Trade AgreementPresident Uhuru KenyattaAfrican Union

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KQ counts $8m in lost revenue after flying out of China route

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JAMES ANYANZWA

By JAMES ANYANZWA
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Kenya Airways (KQ) has lost $8 million in revenue in about one month since it suspended flights to China as a precaution against the deadly coronavirus outbreak.

The losses on the Nairobi-Guangzhou route include foregone passenger and cargo revenue.

Acting chief executive Allan Kilavuka told The EastAfrican that China is a key cargo origin as well as a main feeder to the regional freighters, and the suspension of flights since the end of January has dealt a big blow to the airline’s revenues.

“We are looking at lost revenue of about $8 million, both passenger and cargo. However, various initiatives are in place to increase passenger and cargo revenues on other routes to minimise this impact,” said Mr Kilavuka.

The coronavirus has so far infected more than 75,000 people globally and killed over 2,200.

“I am optimistic that the situation in China will be under control soon and we will resume our service that continues to create convenience and a good flying experience for all our guests,” he added.

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He said that KQ switched the aircraft that operated the route to China, to Dubai, from February 11, and changed the timing of the Bangkok flight from a midnight departure to early morning as a way of maintaining operational efficiency and minimising disruption to passengers.

“Due to our additional precautionary measures we have faced some delays in operations. We are working closely with the port health teams from the Ministry of Health as guided by the World Health Organisation who continue to monitor and advice on the next steps to take with regards to the coronavirus,” he said.

KQ’s stock on the NSE has fallen by 1.29 per cent over the past month to trade as low as Ksh2.29 ($0.022) per share on Thursday last week.

In the past seven years, the share price has dropped by over 75 per cent from a high of Ksh9.40 ($0.094) in 2013.

KQ, which is set to be delisted from the Nairobi Securities Exchange after parliament approved its takeover by the State, widened its losses for the year 2018 to Ksh7.5 billion ($75 million) from Ksh6.4 billion ($64 million) in 2017.

Its net loss for the six months’ period to June 30, 2019 more than doubled to Ksh8.5 billion ($85 million) from Ksh4 billion ($40 million) in the same period the previous year (2018).

Globally, the International Air Transport Association (IATA) forecast the aviation industry will lose $29 billion worth of passenger revenues this year, of which $40 million will be from African airlines.

According to IATA, carriers outside the Asia-Pacific are forecast to lose $1.5 billion, assuming the loss of demand is limited to markets linked to China.

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Global traffic is forecast to drop, causing the first overall decline in demand since the Global Financial crisis of 2008-2009.

“This will be a very tough year for airlines,” said Alexandre de Juniac, IATA’s director general and chief executive.

“It is clear the airlines are struggling. Our initial analysis suggests that we are facing a 4.7 per cent hit on global demand. That could more than eliminate the 4.1 per cent growth we forecast for 2020 in December.”

Kenya Airways flies to Guangzhou, China’s third-largest city, three times a week.

Before the suspension of the flights, a passenger from China was quarantined after being suspected to have contracted the deadly flu-causing virus.

Regional airlines such as RwandAir and Air Tanzania have also suspended flights to China over the viral outbreak.

Globally, Virgin Atlantic, Germany’s Lufthansa, Air France and KLM SA have also stopped flying to China.

Kenya’s lawmakers have approved the nationalisation of KQ to save the airline that has been run down by mismanagement and mounting debts.

The government has adopted a plan to buy out KQ’s minority shareholders and convert shares held by commercial banks into debt.

Under the plan, the government will also create a special purpose vehicle — Aviation Holding Company (AHC) — to manage Kenya’s aviation sector.

The AHC will have four subsidiaries — Kenya Airways, Kenya Airports Authority, Jomo Kenyatta International Airport and a centralised Aviation Services College, which will be run independently.

KQ is 48.9 per cent owned by the government, and a group of 11 local banks which own 38.1 per cent of the shares.

Other shareholders include KLM Royal Dutch Airline (7.8 per cent), employees (2.4 per cent) and other shareholders at 2.8 per cent.

However, the airline is facing difficulties keeping up with its competitors such as Ethiopian Airlines, Rwandair, Emirates, Qatar and Etihad, which are all fully state-owned and subsidised, and have engaged in aggressive growth strategies focused on volume and market share.

KQ’s former chief executive Sebastian Mikosz quit in mid-December after he declined to extend his three-year contract, which expired on December 31, citing personal reasons.

In July last year, chief operating officer Jan De Vegt resigned after serving for three years, and chief financial officer Hellen Mathuka was suspended in September.

KQ was listed on the NSE in 1996 after the government offered a 51 per cent stake to the public at an offer price of Ksh11.25 ($0.11) per share.

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Uhuru should woo the diaspora to fund development projects : The Standard

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Kenya has a largely untapped resource that until now has remained mostly off the radar: the diaspora.
This community regularly sends money to family members at home to pay for food, education, necessary medical services and other day-to-day expenditures.
However, these remittances are rarely invested into our economy in a more than superficial way. This is partly due to lack of awareness by Kenyans in the diaspora about how investing in Kenya can yield high and secure returns. Another reason is that the government has not had strong enough “pro-diaspora policies” to attract their assets,” according to Shem Ochuodho of the Kenya Diaspora Alliance.

SEE ALSO :After Uhuru decision on housing, state must listen to people more

This is gradually changing, however. There now seems to be an effort by the country’s leadership to reach out to Kenyans abroad. The Building Bridges Initiative, for instance, engages with them by calling for more inclusivity of Kenyan citizens, no matter where they reside. It is surprising that it took this long for this recognition to be publicly made by the government, but better late than never. It is yet another testament to the kind of forward-thinking that we have seen in the BBI taskforce findings.
Kenyans in the diaspora have increasingly expressed their interest in getting more involved in local issues, whether that be through politics or the economy. Partnering with them to finance Big Four development projects is a great way to begin.
One idea that is already in motion is a green bond, which will allow Kenyans living abroad to directly invest in affordable housing, food security, local manufacturing and affordable healthcare programmes. The money could also be used to invest in agribusiness ventures and new healthcare facilities – such as cancer research and treatment centres.

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The current account deficit in Kenya was reduced from five per cent of gross domestic product in 2018 to 4.6 per cent in 2019. According to Central Bank of Kenya (CBK) Governor Patrick Njoroge, this was partly due to diaspora remittances. If Kenyans are working hard to send money home, why not help them grow their money while at the same time contributing to the prosperity of the country?
Structured strategy

SEE ALSO :The wars in Uhuru and Raila political parties

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Using this logic, the CBK is working to lengthen the maturity period of Treasury bonds. The bonds are a safe and reliable source of income from interest payments every six months.
According to the Kenya Diaspora Alliance, around 75 per cent of remittances are spent on daily family consumption, while only 25 per cent is invested. Typical investments include real estate, land and savings. The government is only now beginning to develop a structured strategy to reach out to the diaspora and inform them of good ways to invest their money in public projects. While real estate is widely seen as a relatively safe investment all over the world, not a lot of information has encouraged people to invest in growth at the micro level. For example, President Uhuru can mobilise the diaspora community to finance part of the SGR from Suswa to Kisumu.
The original plan was to draw the funds from China, but this offers us a great opportunity to be more self-reliant.This is precisely the kind of unity that Uhuru and Raila Odinga sought when they shook hands in March 2018. It was something more transcendental. It was building a sense of community for people who have felt inadequately represented and and wondered about their role in the larger framework.
– The writer is an architect and comments on topical issues.


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Uhuru KenyattaDevelopment projectsDiaspora

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‘Introduce Alcoblow to gauge sobriety of MCAs’

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GEORGE MUNENE

By GEORGE MUNENE
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There was an uproar in Embu County Assembly when one of the members suggested that Alcoblow be introduced to gauge the sobriety of her colleagues before any sitting.

Nominated ward rep Margaret Lorna Kariuki found herself in trouble when she insisted that the gadgets are important as they would ensure discipline in the House.

Temporary Speaker Phillip Nzangi said the drunkenness claims were serious.

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Evurore MCA Duncan Mbui demanded that Ms Kariuki be ruled out of order and forced to apologise to her colleagues for painting them in bad light.

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