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KENYA’S WEALTH IN FOREIGN HANDS
If Kenya were a cake to be shared out,Kenyans would only lay claim to 31 per cent of the country’s total wealth. The rest would go to foreigners. Agriculture,tourism and banking,which combined bring in the country’s largest earnings,are in foreign hands. Last year,tea,tourism,flowers and coffee earned the country Sh140 billion,nearly half of the annual national budget. Of this money,only 31 per cent ended up in the country – as tax and real earnings to the nationals. And shareholding in the richest 20 companies that trade at the Nairobi Stock Exchange is foreign. The skewed distribution of wealth between foreigners and Kenyans puts paid to all efforts since independence to hand control of the country to its citizens.
Tea growing,which earned the country Sh43.5 billion last year,is concentrated in the hands of six leading agricultural companies whose shareholding is largely foreign. Up to 78 per cent of earnings from tea went,therefore,to foreigners – leaving the balance for Kenyans. The Big Six in the tea sector are Unilever Tea Kenya,Kakuzi Ltd,Williamson Tea Company,Kapchorua Tea,Limuru Tea Company and Sasini Coffee and Tea. The British-owned Brooke Bond Group holds 43.1 million shares of the total 48.8 million shares issued in Univeler Tea Kenya . The same group owns 54 per cent of the total 3.9 million shares issued in Limuru Tea Company. In Kakuzi Ltd,foreigners have a total shareholding of 68.3 per cent of the total 19.6 million shares issued. They hold the shares through Bordure Ltd and Lintak Investment Ltd,with 35.1 and 33.2 per cent shareholding,respectively.
Britain’s Williamson family has a controlling majority shareholding in both Williamson Tea and Kapchorua Tea companies. In Williamson Tea,it holds 67.2 per cent of the total 8.8 million shares issued through their company,Ngong Tea Holding PLC. In Kapchorua tea,they hold 40 per cent of the 3.9 million shares issued. Sasini Tea and Coffee Ltd is 87.3 per cent owned by business magnate Naushad Merali,a Kenyan. Merali’s companies hold his shares in these businesses: Legend Investments Ltd (51.7 per cent),East African Batteries (18.7 per cent), Yana Towers (15.9 per cent) and Swan Estates (1.04 per cent).
The reinvigorated tourism sector,which earned Sh42 billion last year,is also foreign-owned. And just as the Sh43.5 billion earnings from tea sector ended up in foreign pockets,so did the Sh42 billion that came from tourism. Tourism earnings went into three directions: Hotels,airlines,and travel/booking agents,in that order. Of Kenya ‘s 290,000-plus tourist hotel bed spaces,foreign hoteliers own 74.3 per cent of it. Tour flights to Kenya are entirely in the hands of foreign airlines. It is all the more foreign-dominated in the traditional tourist peak periods of Easter and Christmas,when there are no scheduled flights to Kenya ‘s tourist hub of Mombasa . During the two seasons,tourists arrive in Mombasa in chartered jets arranged by European tour operators.
Foreign companies stationed in European and American capitals also entirely control hotel bookings and transfers. Where internal travel is concerned,foreigners too,dominate by owning 7 of the 11 leading local tour travel firms. At the end of the day,tourism in Kenya remains a foreigners’ enclave with indigenous Kenyans left to scratch the surface on petty trades like selling curios and prostitution. After years of lobbying,last year the European Union set aside Sh250 million to economically empower indigenous Kenyans to get a fair share of the lucrative industry. Seven projects were targeted to tilt the balance in a programme called Tourism Diversification and Empowerment Project. But a spokesman at the Nairobi EU office said the money is yet to be released as project proposals submitted are still under evaluation. The only hotel chain listed on the Nairobi Stock Exchange is the TPS Serena. The Aga Khan Fund for Economic Development holds the company’s majority shareholding through its company,TPS Holdings Limited.
Horticulture,which earned Kenya Sh28.2 billion last year,is the country’s third largest foreign exchange earner. It,too,is a foreigners’ affair. Indigenous Kenyans mainly come in as casual labourers on the flower farms. Of the 44 certified companies dealing with horticulture products,26 are foreign-owned. But an even bigger irony is that the leading 10 players in the industry – all foreign-owned – bag 83 per cent of the total income from the sector. Flower farming (floriculture) is the key plank in Kenya ‘s agriculture sector. Seventy six per cent of Kenya ‘s total flower production is concentrated in foreign-owned flowers farms around the Naivasha area. The big three are Homegrown,Sulmac and Oserian. Late last year, Kenya overtook Israel and Columbia as leading exporters of cut flowers. But you would not know that from the world’s leading flower auctions in Amsterdam and London . Why?
Foreign flower exporters in Kenya have registered their companies abroad – mainly in Amsterdam – and sell flowers they have grown in Kenya under a foreign label. In that case,while flowers from a local company are sold in Amsterdam as flowers from Kenya ,Dutch companies growing their flowers in Naivasha sell theirs as flowers from Holland . The consequence of it is that flowers owned by Dutch companies receive preferential treatment at the auction,including exemption from the strict EU-imposed export rules. Flower auctions in Amsterdam and London account for 65 and 25 per cent of Kenya flower sales respectively. Of the approximate 60,000 tonnes of flowers exported from Kenya last year,37,000 tonnes were sold in Amsterdam and London auctions as flowers from Holland . The statistics can make it look like the entire flower industry in Kenya is one big conspiracy against indigenous people. Foreign air charters,the only ones used in flower transport,charge the highest rates in Nairobi . Freight charges on flowers from Kenya are twice those in the capitals of Kenya ‘s nearest competitors Israel , Columbia and Costa Rica . There are also 40 to 45 per cent higher than in Egypt and South Africa , Kenya ‘s two biggest competitors on the continent. At $400 a day,inspection and storage charges at Jomo Kenyatta International Airport are the highest in the world. So is the freight charge of $1.85-$2.2 per stem.
Flowers sold in Kenya ‘s name are inspected stem by stem at the JKIA at the cost of 12 Euro cents a stem. Those grown in Kenya but marketed by overseas-accredited companies are only inspected in bulk. On average,it costs upwards of $1 million to set up a typical flower farm on a half acre spread,which in turn brings in a $50,000 a year. Kenya’s fourth leading export earner,coffee,is equally depressing on the ownership scale. The majority of small-scale coffee growers in Kenya sell coffee raw from the farm,earning less than 10 per cent of what the finished end product earns in foreign markets and in a foreign label. Though touted as an agricultural country,the other large-scale agricultural activities in Kenya are also foreign-owned. Rea-Vipingo Plantations,which deals mainly in sisal and dairy farming is 77 per cent owned by the Robinson family of England . They hold the shares through REA Holdings PLC,Unibuckle Holdings Ltd and REA Trading Ltd.
Del Monte,world famous for pineapple products,is entirely a French affair and sells its products with the label “Made-in-France”. The question of who owns Kenya ‘s wealth sticks out like a sore thumb in the banking sector. The leading two banks with a combined market share of 71.4 per cent are Barclays Bank of Kenya and the Standard Chartered. They are foreign-owned. Barclays Bank plc of London owns 68 per cent stake in Barclays Bank of Kenya . Standard Bank Africa,a London outfit,in turn owns 81 per cent shareholding in Standard Chartered Bank. To avoid domination by foreign banks, Nigeria and South Africa enacted laws on percentages of shareholding a foreign bank could own. Foreign ownership is also the same cord that runs through key blue chip companies listed on the Nairobi Stock Exchange. At the East African Breweries,British-owned Guinness plc holds 63.5 per cent of the total equity,leaving Kenyans to scramble for the rest. Guinness shares are held in the names of Diageo Kenya Ltd and Diageo Netherlands B.V.
In the Nation Media Group,the Aga Khan holds 28.2 million shares of the 35.6 million shares issued. The Aga Khan’s shares are held in the names of the Aga Khan Fund for Economic Development and Amin Nanji Juma. In Kenya Airways,Dutch company,KLM,holds 40.6 per cent equity. In Total Kenya Ltd,French companies Total Outre-mer and Elf Oil Kenya Ltd,own 77 per cent of the total shareholding,while in BAT Kenya Ltd, Molensteegh Investment BV of London ,holds 68 per cent of the total shareholding. The question of who owns Kenya ‘s wealth generated a national debate in 1968 when the National Council of Churches of Kenya published a paper entitled: “Who Owns Kenya ‘s Industry?” In the paper,the late Anglican Bishop,the Rev Henry Okullu,regretted that five years into independence,”the compass needle had not moved in the direction of indigenous ownership of Kenya ‘s wealth.” Thirty-seven years later,the Rev Okullu would turn in his grave to note that the needle has drifted even further away.
“Africa could be the best place on earth, but instead our best and brightest minds are leaving the continent in their millions.” So says June Arunga, a 22-year-old Kenyan law student who’s facing the same dilemma. Should she stay or should she go?
To find an answer to that question, June embarked on a 5000-mile, six-week, soul-searching journey, travelling the length of Africa through Egypt, Sudan, Congo, Angola, Namibia and, finally, South Africa. Six conflict-riven countries that span the continent – from Cairo to Cape Town – and comprise ‘The Devil’s Footpath’.
Aid agencies, UN peacekeepers and even multinationals fly June into some of the continent’s bleakest war zones – meeting tribal chiefs, DJs, rappers, soldiers, miners, students, school kids and witch doctors. The journey is an emotional one, showing the very best and the very worst of Africa.
After six weeks June arrives in Cape Town – angry at the continent’s leaders, proud of everyday Africans and very confused. Can Desmond Tutu, one of Africa’s most respected statesmen, help June decide whether there is a future for her in
It is one week and a few days since a Kenya Airways aircraft Boeing 737-800 heading to Nairobi, crushed into a think forest in Douala, Cameroon. By press time last week, only 80 bodies out of 114 had been recovered. Business Week’s BEN MOSES ILAKUT talked to KQ, Uganda Country Manager, Mr Daniel Maundu about the crisis and future of the region’s best performing airline. Below are excerpts:
How is the airline coping with the recent tragedy in which one of your aircrafts crushed killing all people on board?
It was an accident that we least expected. What we are doing now as a customer sensitive company is to communicate to all affected persons.
We set up a media centre at the Panari Hotel in Nairobi to communicate on the crisis immediately we learnt of the disappearance of the plane.
Our CEO Mr Titus Naikuni has since then had to update the public, the media and relatives on the latest developments after every three hours.
The President of Kenya Mr Mwai Kibaki was briefed by KQ managers on what was being done to address the post crisis situation. At this point communication is very important.
Other than communication what else are you up to?
We have gone further and set up five crisis centres.
There are three in Nairobi because it is the headquarters of the airline. Most of the passengers were on transit hoping to connect from Nairobi to other destinations. One centre is at the Intercontinental, another one at our headquarters in Embakasi and the other is at Jomo Kenyatta International airport.
The other crisis centres are in Johannesburg, South Africa and Douala Cameroon. In all these centres we have people working 24 hours with dedicated phone lines to attend to all affected persons. We have hired psychiatrists to receive relatives of the affected and take them through counselling, because they are traumatised by lose of relatives.
As we continue to communicate we also have to facilitate those who want to travel to the scene. Two nominated relatives of each of the deceased or next of kin are being facilitated to visit the scene. We will provide tickets, visa, accommodation and food for at least a week for kinsmen coming from any part of the world. Of course they have to be vetted by the crisis centres.
The centres have also become the official communication offices. Successful companies are increasingly being judged by how they communicate and how they manage crisis-it’s the biggest test.
What should your clients and well-wishers out there expect?
It’s business as usual now; we would like to assure the public that KQ is one of the only two IASO (International Operation Safety Audit) recognised airlines in Africa. And this is the highest recognition an airline can get in terms of safety.
Our commercial operations to Cameroon have continued, since then. Cameroon is a very critical, market for us because we fly to two cities; Douala and Younde.
We want to assure them that safety is supreme to us and we don’t compromise on it. We have in the past, for example, staked and lost [invested] millions of dollars to divert flights from Nairobi to Mombasa or Entebbe because of the early morning fog in Nairobi.
We have delayed flights for hours whenever we are not sure about even the slightest internal or external conditions. That means we have spent money to re-book passengers into hotels, pay for food and a few minutes of airtime and we will continue to do that. To us that is part of the business.
The crushed aircraft was one among three that were brought in December last year and was just beginning its sixth month of operation and has had no incident. In Cameroon it was delayed for one hour because of bad weather, before being cleared later.
Can you summarise Kenya Airways’ performance, particularly on the Entebbe- Nairobi route over the last quota?
Our financial year is April to March 31. We are soon publishing the performance results but generally we have been growing in the last three quarters of the year.
The passenger numbers have been growing at a rate of about 15% every year. Last year we broke the 2 million passenger mark because of the expansion.
What are KQ’s expectations; what new strategies do you have in place to achieve these expectations?
We will continue the growth trend. Later this month we are getting a new fleet of three Embraer 170 Jets, with a seating capacity of 72.
They are expected to help expand the domestic routes. The Embraer will replace the SAAB A340′s which will be retired from the Kenya Airways Fleet.
We are continuing to modernise, bringing in fleet that is fit for our business requirements. The network expansion will also continue. Recently we launched the Nairobi- Paris route and a number of other routes have been brought on board.
We added the Comoros Islands in the Indian Ocean. In West Africa we have Cotonou, the capital of Benin and Monrovia in Liberia. In West Africa alone we now reach 11 destinations from nine previously in just one year.
In East Africa we have grown the list to nine points by three additions, notably Mauritius, the Comoros Islands of Moroni and Hahaya.
In Southern Africa we fly to six cities, in Northern Africa we fly to five routes. Of course we also fly to Asia, the Middle East, and Europe and operate domestic flights to Lamu, Kisumu, Malindi and Mombasa.
There is a general feeling that the Entebbe Nairobi route is overbooked most of the time, and that suggests low capacity. What is your take on this observation?
Let me explain how timing plays a role in the level of booking and pricing.
The 5:00am flight for example is crucial to many passengers because they are keen on catching their early morning connecting flights. The 3:00pm flight also crucially connects early evening departures, so you find them fully booked.
Similarly towards the weekend, especially Friday and Sunday, the bookings go up because social travel within the region peaks, so again there is tendency of full booking.
The 10:30 and 2:10 flights, however, are under booked during the week and you find many empty seats in the aircraft.
That is the only way you may view the capacity issue. It affects only peak hours. There is, however, a lot of room for clients to exploit day time flights because they get special rates.
Your passengers also complain of high cost. They say the Entebbe-Nairobi Route is the most expensive of all KQ operations. How would you explain that?
The fair from Entebbe to Nairobi has two components; namely the fair itself and the taxes.
Seven months ago, our lowest fair without taxes was US$225, now the lowest is $199. So you can see the reduction margin. Including taxes it was $315 and now is $289.
The other thing about fares is that they are not fixed.
We offer a spread of fares depending on the time of the day and the situation at booking time. When the booking is heavy, the fare becomes more competitive and when booking is low, competition goes down.
That means clients can benefit from discounts. KQ carries passengers to 44 destinations and so they are not necessarily Entebbe Nairobi passengers.
If for example we were flying strictly Entebbe- Nairobi, the fares would be extremely high. So it is not just a matter for Entebbe-Nairobi. Fares are mainly determined by operational costs like servicing, fuel etc.
What is KQ’s position on the single sky project?
The single sky project is more of a national/country project than the airline project.
KQ as a player will support any treaties that the Kenya government signs. Each country normally signs Bilateral Air Service Agreements, which determine how many times a flag carrier flies into another country.
As KQ, we will advice KAA and government on which bilateral agreements we should enter to foster business
What plans do you have for the Common Wealth Heads of Government Meeting (CHOGM)?
CHOGM is a great opportunity for Uganda and East Africa as a region. We definitely welcome it.
We are positioned well to bring in delegates and fly them back to their respective destinations. KQ covers most of the Commonwealth in Africa. We will also bring in other delegates from Europe, Asia. We will have to increase our capacity of aircraft and readiness. We are prepared to deploy enough aircraft depending on the demand. We will be flexible.
You are the official airline for the e-Leaning Conference at the end of this month in Nairobi, how come?
Conference tourism has been on the increase in East Africa, Nairobi has increasingly become a conference tourism destination.
The overall picture of benefit to the region motivated us to offer discounted rates to participants as long as the conference organisers introduce them to us.
It is under that policy that the e-learning conference is benefiting a 10% discount on all tickets to persons introduced to us by the organisers.
Spanish giants Real Madrid will tour Tanzania in July on President Jakaya Kikwete’s invitation, it has been announced by the government.
This comes after a successful tour of Brazil by Taifa Stars, Tanzania’s national soccer team. This tour will be another plus for the country’s efforts to rebuild soccer. According to BBC reports, the government has said that preparations for the high-profile visit have already started.
Tanzania’s Minister of Information, Culture and Sports, Muhammed Seif Khatib, said Real Madrid have confirmed their visit in a letter to the Tanzanian ambassador in France. The Tanzania government, led by President Kikwete, has undertaken to rebuild the country’s soccer, which has been in decline for over two decades.
“It is time we rebuilt our soccer. Tanzania must compete with the best nations in Africa and this government is committed to achieving this goal,” said President Kikwete months after he took over from Benjamin Mkapa.
His first move was to direct the Tanzania Football Federation to appoint a qualified foreign coach. TFF assented and 42-year old Brazillian Marcio Maximo was employed to coach the national team.
His salary is paid directly by the president. In another indication of its seriousness about rebuilding soccer in the country, the government paid for the national team’s visit to Brazil last February. This followed Maximo’s request for a tour of his home country.
Real’s tour is in line with the president’s stated mission to popularise soccer and take Tanzania to the top. He extended the invitation to Real Madrid when he visited Spain last September.
Real’s visit will be used as part of the celebrations to open Dar es Salaam’s new Olympic standard 60,000-capacity stadium. A match there is also planned to cap the visit.
A planning committee headed by the country’s Sports Council chairman, Colonel Iddi Kipingu, has been formed to oversee the preparations for the visit. Among its members is the president of the Tanzanian Football Federation, Leodegar Tenga. Already, the government has pledged millions of dollars to accord Real, nine-time European soccer champions, top of the range treatment.
According to the government, it will be worth the money because the planned tour will raise the profile of Tanzanian football and inspire many young players. Young Africans, popularly known as Yanga, is one of the teams set to play Real Madrid.
Yanga president Francis Kifukwe told the press that the club will do everything to ensure the game is a success. “This is a great opportunity to build a long-term relationship with one of the world’s leading clubs. It will give our players the chance to play with the world’s best,” said an excited Kifukwe.
Recently, Real Madrid travelled to Egypt and played against giants Al Ahly and were paid a staggering amount.
Meanwhile, the Confederation of African Football (CAF) has increased the entry charges for the lucrative Champions League and Confederations Cup. CAF’s Finance Director Karam Mustapha said last week that entry fees into the tournament had been increased from $240 (USh408,000) to $300 (USh550,000).
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