Category Archives: Ethiopia

Paper Planes: Big Day for African Airlines on Paper

July 18 was a big day for various African airlines with news affecting travel in different parts of the continent, ahead of the Farnborough Airshow in the UK.

Nigeria announced plans to revive a national airline – Nigeria Air, a new private sector led-airline in which the government would own no more than 5% and would not manage. It is planned to start flights in December with a target of serving 81 destinations. The launch was officiated by the Nigerian Minister of State for Aviation at Farnborough and he said that they were in talks with Boeing and Airbus and also financiers such as Standard Chartered Bank. The new airline was shown in the livery of new Boeing 737 Max and Airbus A330 models. 

Just a few days after leaders of Ethiopia and Eritrea announced a cease-fire and made historic visits to each other’s countries, Ethiopian Airlines made it’s first flight since 1998  to Eritrea. On the flight were many families reuniting, and former Prime Minister former Hailemariam Desalegn. The flights will be seven days a week, between Addis and Asmara and Ethiopian,  which is expected to be part of some privatization program, was also reported to be planning to invest in a 20% stake in Eritrean Airlines.

Also there are reports that Ethiopian Cargo, Africa’s largest cargo operator, is to sign a joint venture with parcels and logistics giant DHL that would see DHL take up a 49% stake in the company.

A few days ago, Air Tanzania received its first Boeing 787 Dreamliner, which is expected to carve some routes in East Africa that are controlled by Kenya Airways and Rwanda Airlines.

Also at Farnborough, Uganda Airlines signed an MOU for two A330-800 Neo planes which they would fit in a three class-layout.

Earlier the same day, Uganda (National) Airlines announced an order with another manufacturer Bombardier for four CRJ900 planes.

Kenya Airways continues to market new routes Mauritius, Cape Town and the new direct non-stop flights to New York that will start in October 2018.

At Farnborough, Embraer and Kenya Airways announced a spare parts deal.

South Africa Airways celebrated Nelson Mandela’s 100th birthday with some new livery on some planes.

The revival comes all comes at a time when African Airlines now account for just 20% of the air traffic from the continent, down from 60% in a decade as Gulf carriers have made great strides in the continent. African airlines have also struggled with financial performance and management, with only Ethiopian posting consistent profits in the last decade. And, notably,  the deals announced at Farnborough lack detail on the financing aircraft, with Boeing 787’s and Airbus A330’s each having official prices of over $200 million.

Earlier, Skytrax published its list of the top 100 airlines in the world and it featured some African airlines including Ethiopian Airlines (at number 40), South African Airways (45), Air Mauritius (69), Air Seychelles (82), Kenya Airways (85) and was topped by Singapore, Qatar, All Nippon, Emirates and Eva Air. Other awards for African airlines were in categories of best airline staff service (South African Airways), best regional airline (Royal Air Maroc), best low-cost airline ( Mango) and best African airline (Ethiopian).

EDIT: More from Farnborough – via Leeham News & Comment.

  • Air Botswana signed a firm order for two ATR72-600s.
  • Mauritania Airlines placed a firm order for two E175s that will deliver next year.

Asoko reviews Flower Farms (Floriculture) in Kenya

Asoko Insight has published an interesting review of flower farms and the floriculture industry in Kenya showing trends for the region and new markets for what has been a steady export for the country. It is Interesting that the Netherlands is considered the world’s largest producer of flowers with a 45% of the export value, followed by Colombia 17% and Ecuador 10%. Kenya has 9% of the global flower market, far ahead of Uganda and South Africa in Africa.

  • Export-oriented: Kenya flower exports earned $813 million (Kshs 81 billion) in 2017 according to Kenya’s Horticultural Crops Directorate and these are growing at 11% per year. Kenya’s 2018 economic survey has these cut flowers, 160,000 tones of them representing 71% of horticultural earnings; much larger than vegetables and fruits at Kshs 24 and 9 billion, respectively. Most flowers are grown for export, while domestic demand is but a small fraction that comprises purchase of low grade products. 
  • Producers: There are 236 companies actively growing flowers, 24 are large, and these include Oserian Development, James Finlay, Carzan, Primarosa, Vegpro Group, AAA Growers, Mount Elgon Orchards, Flamingo, PJ Dave, Kariki, and Timaflor. Producers need certification to break into export markets and sell at premiums. Large farms market their flowers to sister companies and contract smaller farms who also have the option of using international wholesalers.
  • Netherlands: FloraHolland is the largest flower auction in the world and has historically Europe has been the main destination of Kenya’s horticultural trading, but the report  mentions that some large Kenyan producers are bypassing the Dutch auction system, directly supplying bouquets and loose flowers to large Western retailers such as Walmart and Tesco who focus on delivery, reliability, and traceability, not just price. Primarosa was recently in the news pushing for the Kenya floriculture industry to set up its own flower auction.
  • Ethiopia: The report also compares the floriculture industry of Kenya and Ethiopia which has been in the news due to the long-running Karuturi versus Stanbic bank case which has highlighted that some flower farms are shifting their floriculture interests and investments to Ethiopia where there are less labour (union) and tax issues in production. Kenya’s flower exports in 2016 were $690 million compared to $190 million for Ethiopia. That said, it has not been smooth sailing for Karuturi in Ethiopia so far.  

Read more in the Asoko report (PDF) on Kenya’s floriculture industry.

Ethiopia privatization window opens

Several weeks of rapid news has seen Ethiopia privatization of state enterprises proposed as one of several changes to sustain what has been one of Africa’s fastest-growing economies. This all comes in the wake of a new era under Ethiopia’s new prime minister, Dr. Abiy Ahmed Ali, who is leading change within the country and outside, such as on his recent visit to Kenya.

In the last few days the Ethiopian government has lifted a state of emergency, signaled an effective cease-fire with Eritrea, released long-jailed political prisoners, reshuffled security leaders, launched e-visa’s for all international arrivals with a view to dropping visa requirements for all other African nationals, and opened the Menelik palace to tourists among other changes, which have drawn comparisons or Abiy to Mikhail Gorbachev in Russia in the 1980’s.

The surprise was statements about plans for the massive Ethiopia privatization program in which the government would sell minority stakes in roads, logistics, shipping, and prime assets like Ethiopian Airlines, which just took delivery of its 100th aircraft, a Boeing 787, and which is the centrepiece of a logistical, tourism and business hub plan for the country. The program would also extend to two sectors that have been off-limits to foreign investors up to now;  banking and telecommunications.

For comparison, a 2012 list of Eastern Africa’s largest banks had the Commerical Bank of Ethiopia as the largest in the region followed by National Bank of Mauritius and KCB in Kenya, and at last measure (2017) had about  $17 billion of assets, 1,250 branches, and 16 million customers. And in telecommunications, Ethio Telecom, a government-owned monopoly has about 20 million customers in a country with a population of 107 million (many of them children), but still a low penetration rate. 

Ethiopia privatization of state enterprises is not a new item, but it is one which the government has put side as it pursued an industrialization model that has seen the building of new infrastructure, new factories, industrial parks, agro-processors, leather parks, vehicles manufacturers etc. but which has not been equally felt by the country’s large and young population – and this has seen wide-spread protests and a state of emergency that ushered in a new leadership with a new prime minister (Abiy). 

It also came after a lengthy story in the FT – Financial Times on the state of Ethiopia’s economy which cited the fatigue that China has with large investments and some projects that are operating below capacity coupled with the high government debt and shortage of foreign currency  – Two investors said that Sinosure, China’s main state-owned export and credit insurance company, was no longer extending credit insurance to Chinese banks for projects in Ethiopia as willingly as it used to. It notes that imports into the country are four times that of exports from  Ethiopia leading to the shortage of foreign currency.

The changes in Ethiopia could also be a warning to other African counties that have been moulded in a similar way to Ethiopia model, with heavy borrowing from China and building infrastructure and mega-projects for the future.  When the Ethiopia privatization program starts it’s unclear who will benefit and if Chinese companies will be given priority given that they have invested for a long period in Ethiopia compared to other new companies, such as Vodacom and MTN, who are excited about the prospects that are now opening up

Kenya Airways and Delta Codeshare

EDIT 15 August 2018  Delta Air Lines entered into a codeshare partnership with Kenya Airways. Effective August 15, Delta’s code will be placed on Kenya Airways’ flights from Amsterdam, Paris, London, and Accra to Nairobi, enhancing connectivity and providing customers with a one-stop seamless travel experience from the United States. In addition, Delta will place its code on Kenya Airways’ services to more than 10 key cities across Africa, including: Addis Ababa, Ethiopia; Lilongwe, Malawi; Maputo, Mozambique; Johannesburg, South Africa and Djibouti City, Djibouti.

May 10 2018 Delta Air Lines and Kenya Airways have applied to the US Department of Transportation with an expedited request for the two airlines to be expeditiously granted reciprocal codeshare rights for each others’ flights.

The application (PDF) dated 7th May, applies to Delta and Delta Connection flights in North America, Latin America, and the Caribbean to carry the Kenya Airways (KQ) code, while the Kenya Airways will immediately place Delta’s code (DL) on flights between Nairobi to/from Johannesburg (South Africa), Lilongwe, (Malawi), Djibouti (Rep. of Djibouti) and Maputo, (Mozambique).

Delta routes will be part of the codeshare.

Delta which reaches 325 destinations, currently has services to Dakar (Senegal), Lagos, Accra, and Johannesburg, while Kenya Airways is scheduled to start flights to New York in October 2018. There is no mention of Air France/KLM, who have been Kenya Airways long-term joint-venture partner for two decades, in the new US codeshare application.

The new codeshare arrangement which covers “persons, property, and mail,” is an expansion of a previously approved reciprocal codeshare arrangement between Northwest Airlines and Kenya Airways for flights originating in Kenya and North America. Northwest merged with Delta in 2009. The new codeshare will also extend to all Delta Connection regional affiliate airlines (namely Compass Airlines, Endeavor Air, ExpressJet Airlines, GoJet Airlines, Republic Airline and SkyWest Airlines).

Aside from Kenya, Ethiopian Airlines, which flies to several American destinations of Washington (DC), Newark, Los Angeles, Chicago, Toronto (Canada), Buenos Aires (Argentina) and Rio de Janeiro & São Paulo (Brazil) is also expanding its American network via routes in West Africa. The airline is reported to have secured rights to fly passengers to Houston via Accra, while it also confirmed that it had entered a codeshare with Air Côte d’Ivoire for flights to Newark via Abidjan.

Ethiopia – Kenya relations impact roads and coastal developments

This week, Ethiopia’s new Prime Minister, Dr. Abiy Ahmed Ali, visited Kenya on a state visit and with his host, President Uhuru Kenyatta made commitments for regional infrastructure projects of aviation roads, railway, and electricity.

According to the joint communique released by Kenya’s President, some resolutions going forward from their talks include:

  • The two countries will develop Moyale on the border as a city and economic zone.
  •  Kenya will avail land to the Ethiopia government at Kenya’s new port in Lamu that is under construction, and Ethiopia will develop that to facilitate logistics for their country,

  • The two countries will develop the LAPSSET projects including the road from Isiolo, (via Moyale) to Addis Ababa, a railway line from Addis to Nairobi and an electricity transmission line between the two countries. They would also supervise the road between Lamu, to Moyale (via Garissa and Isiolo) and on to Addis (via (Hawassa).
  • Ethiopian Airlines would be granted a second flight frequency to Mombasa,
  • Also, the two countries will have joint military training even as the leaders the lack of  international support to combat Alshabab through AMSIOM which faced inadequate funding and attention. The countries would also cooperate on agriculture, and the exchange of prisoners (edit: this is already happening).

Changes at Lamu are coming, including land acquisition by the government which has been slow and sometimes controversial and recently, a court ruled that the government should compensate Lamu fishermen (4,600 of them) for not consulting them on the port design plans.