Category Archives: Middle East

S&P ranks top banks in MEA (Middle East & Africa)

Qatar National Bank (QNB) with $229 billion of assets is the largest bank in the Middle East and Africa (MEA) zone according to S&P Global Market Intelligence. It is followed by First Abu Dhabi with  $182 billion and then the top African bank, which is the Standard Bank of South Africa (Stanbic) with $164 billion of assets. Fourth and fifth are banks from Israel which S&P notes rose on the list due to the appreciation of the country’s Shekel currency versus the US dollar.

S&P MEA top bank origins

South Africa has the most African banks on the list with First Rand (ranked 8), Barclays Africa with $94 billion of assets and which is rebranding to Absa is ninth, while Nedbank and Investec are in 13th and 27th place respectively on the S&P list.

Other African banks are the National Bank of Egypt (14)  and Attijariwafa of Morocco (23 ). QNB, which has been publishing quarterly results in Kenyan newspapers alongside other commercial banks, is also the second largest shareholder of Ecobank of Togo, but there are no Nigeria banks or any Sub-Saharan ones from the East or West blocks of the continent on the MEA list. Kenya’s largest bank group – KCB has about $6.5 billion of assets.

QNB and the banks on the MEA list are ranked according to IFRS accounting principles but certain banks use local accounting measures e.g Israeli GAAP, Eqyptian GAAP and Qatari GAAP.

The MEA banks are a sub-set of S&P’s list ranking the largest banks in the world. The list was topped by four banks from China, led by the Industrial & Commercial Bank of China with $4 trillion of assets, followed by China Construction Bank, Agricultural Bank of China and the Bank of China. There is more diversity after that with Mitsubishi UFJ of Japan in 5th place with $2.8 trillion of assets, followed by  JPMorgan Chase (USA), the UK’s HSBC and in 8th place is BNP Paribas of France with $2.3 trillion of assets. Eighteen of the top 100 banks are from China, with $24 trillion of assets, the US had eleven banks and Japan has eight banks, but none from the MEA.

Qatar Bank Sanctions

Yesterday Saudi Arabia, the United Arab Emirates, and Egypt led a handful of other countries including Bahrain, Yemen in severing diplomatic relations with Qatar – and these have now extended to some Qatar Bank sanctions.

  • The three Gulf states gave Qatari visitors and residents two weeks to leave their countries. 
  • Saudi also closed the border and halted air and sea traffic with Qatar, urging “all brotherly countries and companies to do the same”
  • Bahrain’s withdrew its diplomatic mission from the Qatari capital, Doha, within 48 hours 
  • The UAE  ordered Qatari citizens to leave the country within 14 days and banned its citizens from traveling to Qatar.
  • Egypt also announced the closure of its airspace and seaports for all Qatari transportation “to protect its national security”.
  • UAE-based carriers Emirates, Etihad Airways, and FlyDubai said they would suspend flights to and from Qatar beginning Tuesday morning.

Qatar Airways which flies to over 150 destinations was barred from flying over UAE and Saudi Arabia. They have complied, which now leads to some interesting flight radar maps.

Continuing the  onslaught which was apparently green-lit by US President Trump, financial sanctions were now announced today targeting Qatar banks and finance including:

  • Banks in Saudi Arabia, UAE & Bahrain HAVE suspended transactions to banks in Qatar, citing instructions by central banks.
  • Saudi Central Bank told banks not to trade in #Qatari Riyals in addition to foreign exchanges
  • U.A.E. banks not  providing leverage on Qatar bonds
  • Qatari riyal under pressure as Saudi, UAE banks delayed Qatar deals.
  • UAE and Bahraini central banks had asked banks they supervise to report their exposure to Qatari banks
  •  Some Sri Lankan banks stopped buying Qatari riyals, saying counterpart banks in Singapore had advised them not to accept the currency.
  • Commercial banks say that they stopped accepting Qatar Riyal as they have no way of repatriating and clearing them

Other

Older pre-sanction report 

  • Qatari banks have been borrowing abroad to fund their activities. Their foreign liabilities ballooned to 451 billion riyals ($124 billion) in March from 310 billion riyals at the end of 2015, central bank data shows.
  • So any extended disruption to their ties with foreign banks could be awkward, though the government of the world’s biggest exporter has massive financial reserves which it could use to support them. Banks from the United Arab Emirates, Europe and elsewhere have been lending to Qatari institutions.
  • Because of its financial reserves and as long as it can continue exporting liquefied natural gas, Qatar looks likely to avoid any crippling economic crisis. But credit rating agency Moody’s Investors Service said on Monday that if trade and capital flows were disrupted, the diplomatic dispute could eventually hurt the outlook for Qatar’s debt.

Oman Air launches Nairobi flights

Product launches seem to follow an established template: bright flashy lights, cakes, and ribbons, and occasionally a tame wild animal, concluded by a rehashed speech from a government functionary. But no wildlife was present as Oman Air officially launched their four times a week flight to Nairobi at the Kempinski Villa Rosa Hotel on 29th March 2017. The inaugural flight to Nairobi had arrived the previous day and it was received by local Kenya airport and Government authorities.

Importantly, however, was the interest generated of Oman as a destination and indeed a hub for travelers to the Middle East and beyond. The airline’s Deputy CEO and VP –Commercial, Abdulrahman Al Busaidy proved not only an eloquent spokesman for his company but a worthy ambassador of The Sultanate of Oman. The interest of those present at the launch was piqued as few had ever thought of Oman as a holiday destination let alone a hub. Most travelers from Kenya have traditionally chosen the Arab carriers that utilize Dubai (Emirates), Doha (Qatar), Abu Dhabi (Etihad) as well as Sharjah (Air Arabia) which all market themselves’ as glitzy shopping and commercial destinations.

Oman Air doesn’t pretend to be a Gulf Major carrier. Currently Emirates, Etihad and Qatar Airways are the undisputed ME3 giants who are now subject to what has been perceived by many to be protectionist measures from the USA and the UK in the guise of the ‘laptop ban’. Al Busaidy attributes such measures to the incapability of carriers from those countries to compete on services available at their fantastic airports and modern fleet and services. While no US carrier serves the Middle East, the Gulf carriers operate multiple flights to any of the major hubs in the Middle East.

Oman Air is leveraging the long historical ties between Kenya and Oman which date back to the days when the Portuguese ruled much of the East Coast of Africa. Indeed the Sultan of Oman’s army flushed out the Portuguese from Fort Jesus in the 17th Century and the cultural exchanges and inter-marriage with the local coastal people gave rise to Africa’s most widely spoken language, Kiswahili.

Currently, the airline flies to Dar es Salaam and Zanzibar with Nairobi being the 55th destination of the airline’s growing route development. With a popular in-flight entertainment and free Wi-Fi service on most of its aircraft, Oman Air now has a fleet of 47 aircraft with a mix of Embraer Regional Jets (ERJ) for local and regional flights, Boeing 737s for short-haul routes and Airbus A330’s and now the Boeing 787 Dreamliners for the long haul flights.

Indeed two of the Dreamliners were leased from Kenya’s national carrier Kenya Airways (KQ’s) as part of fleet rationalization of KQ’s ongoing Operation Pride restructuring. Both airlines are expected to conclude a code-share agreement by mid-April 2017. Oman Air has also chosen not to align itself with any of the major airline alliances such as Sky Team, Star Alliance or One World but instead code shares flights with Emirates, Ethiopian, Garuda Indonesia, KLM, Royal Jordanian, Saudia, Sri Lankan Airlines, Thai Airways and Turkish Airlines.

Muscat as a base for Oman Air provides the entry point to this traditional conservative Sultanate which has a rich history in preserving its culture (Islamic architecture, all-white buildings, Dhow making, Painting shows, the Muscat Festival and the Khareef Festival held in Salalah in July and August annually) and environment punctuated with over a 100km coastline.

Nairobi will serve as the entry point to popular tourist destinations at the Kenyan Coast and the wildlife marvels of the national parks in the Mara, Tsavo, and Amboseli. Tourism between Kenya and Oman is expected to grow as the airline also envisages Mombasa as a future destination. Coupled with a fairly liberal visa regime (Note that Dubai visa holders get automatic entry into Oman), Oman Air is hoping to prise away traffic from the other carriers especially to the big hubs of the Middle East, India, and China. With introductory fares of $350 to Muscat and $485 to Guangzhou return, this could prove to make for interesting times for travelers to and from Nairobi.

Oman Air indeed epitomizes Oman as a country, its aspirations, culture, history and modernity and its approach to tying itself to both its past and the future as it opens up new destinations. The Nairobi route will be operated by a Boeing 737-800 and the airline’s growth and development strategy plans for 70 aircraft (currently they are 47) and 75 destinations by the year 2020. The four times a week flight (WY722) )leaves Nairobi at 00:45 (on Tuesday, Wednesday, Friday, and Sunday) and operates non-stop and is designed for an early morning arrival in Muscat that enables connections to other 50 destinations.

Oman’s currency is the Rial and OMR 1 = ~$ 2.6, and OMR 1 is ~Kshs 267.

Kenya Agri Exports to the EU take a Hit?

An ad in the September 22 Nation newspaper  has a statement by the European Union addressed to exporters from the East African Community on changes to the tariff regime starting on October 1 owing to the failure of the two sides to sign an Economic Partnership Agreement (EPA)

There was also an article in the same paper showing that a draft has been agreed to, and that a final EPA may be signed and effected in time, but others say it is too late for this.

The new rates, while still subsidized compared to what other nation suppliers pay to export to the EU, are still a blow considering that some exports will no longer be duty-free.

EU Agri

EU newspaper ad

While some like tea, coffee beans & carnations will remain duty-free, Kenyan exporters will pay subsidized rates  of 4.5% on tilapia exports (compared to a normal EU rate of 8%), 2.5% for roast coffee (not 7.5%), 10.9% for mixed vegetables (not 14.4%), and 5% for roses and cut flowers (not 8.5%) between November and May – which includes the crucial Valentine’s Day period when some flower farms can earn half their revenue.

This caps what has been a tough year for Kenya’s  exports of tourism, tea and coffee which have all been adversely affected, and now this.  The recently released Economic Survey 2014 showed total exports declined by 3% from Kshs 518 billion in 2012 to Kshs 502 billion in 2013 (as per the Devolution Cabinet Secretary).

Kenya will  qualify for the preferential (GSP) tariffs, while Rwanda, Burundi, Uganda and Tanzania are currently considered under “least developed countries” and most of their exports to the EU will qualify for a unilateral 0% tariff.

 

Guide to Abu Dhabi

Getting There: There are direct flights from Nairobi to Abu Dhabi on both Kenya Airways and Etihad that cost $600-700. There’s also Qatar Air with a stop-over in Doha and   Emirates Air to Dubai, but which ends with a bus ride to Abu Dhabi City (it’s about a 150KM drive, and rather too short for a jet flight).

 
Sunset at the Yas Marina F1 track
Prior to departure, your airline would usually have arranged for a visa in Nairobi which is emailed ahead of the trip. The costs of the visa may vary depending on who’s doing your booking, and it can sometimes be free if you pay for a full holiday package. Mine cost $82 and  included (a surprise) medical insurance that covered the trip.  

 
On arrival. Clearance from the airport would have been quite fast, but it took about 1.5 hours as most people had to have an eye scan (picture) taken first and the queue was very long. Many tourists were arriving for the Abu Dhabi Grand Prix) and there were long queues for the scan, and for a rubber stamp after from a very tired official who was taking many cigarette breaks.

 

Getting Around: One company operates all the taxis you see around Abu Dhabi. Their website advises passengers of their rights such to see driver’s ID, have the electronic trip meter running, have the air conditioner on in the car, and they can refuse to  share the taxis with other passengers – sometimes there’s a shortage of cars at busy times, and the in-car computer advises taxi drivers to go to certain points where there are many people waiting for rides. 
The computer also cautions taxi drivers if they exceed the speed limit. The city is a marvel of wide highways, with fast moving traffic, and a level of orderliness that will be shocking to Kenyans. Traffic lights are strictly observed and it’s rare to find a traffic jam in the city.

The taxi journey from the airport to the hotel was about 50 Dirhams (AED) while a trip to a mall or office will be about 20 Dirhams. If staying longer than a week, one should learn to use the city bus system. With the heat and large spread of the city, walking long distances is not feasible.
 

Roaming Rates
Staying in Touch: Roaming rates are atrocious so get a local SIM card such as from Qtel or Du. This can be obtained at the airport in the case of Du and a line costa AED 100 (about Kshs 2,500) for a combination of call minutes and data that can also be topped up. Also, Wi-Fi is standard at many hotels as there are a lot of intentional business visitors.

  

Where to Stay: There are many international hotel brands in Abu Dhabi such as Crowne Plaza, Holiday Inn, Rotanna, Ritz Carlton, Westin, Intercontinental, Hyatt, Sofitel, Fairmont, and Radisson. Some of these are located at Yas Island which overlooks the formula one track that has a race in November each year. 
The National  newspaper was available in the hotel lobby for all guests free every day, and most hotels have discrete bars on the top floors serve alcohol to guests. Standard rooms with bed & breakfast go for about $100-250, and this comes with the standard international breakfast buffet, along with a touch of local foods like porridge, humus, sticky rice, seaweed soup etc.


Gold Souk
Shopping & Sight-Seeing: Abu Dhabi is considered one of the more expensive cities for visitors and it will cost an equivalent of about $50-100 per day for 2 to 3 taxi rides and meals around the city. (Excluding hotel costs). 


Credit cards are widely accepted in most places, except in taxis which only take cash in local currency. The UAE Dirham can be exchanged into about a dozen other currencies (Singapore, India, Euro) and the  dollars (fixed at about $1 = 3.6 AED) at forex bureaus in malls and the airport. 

There are a few large shopping malls (Marina mall, Abu Dhabi mall) and Souks (markets) like the gold souk that is located in the Madinat Zayed shopping centre. For transit flyers (using Abu Dhabi airport), the duty free section there is rather tiny, and pricey,  compared to the selection at Dubai airport. But if you fly in with the Eihad, the national carrier, showing your boarding pass around town may entitle you to discounts at some hotels, restaurants, car rental, and recreation sites.

Practice your pit stops at Ferrari World
Sights to see include the  Sheikh Zayed Grand Mosque, and lot’s of unique architectural towers. Others popular with tourists include the Corniche which is a 6 KM long  park where you can cycle, jog, even swim in the heat, and another is Yas Water World. But one of the most unique sites here is Ferrari World Abu Dhabi on Yas Island where adults and kids can can spend hours on a variety of motor stuff – roller coasters, virtual reality tours of the Ferrari factory, view the history of Ferrari racing, race karts, eat, shop for merchandise, and still not cover the entire complex. 

 

With more time, you can do other stuff like take a desert drive, boat ride (from Yas Marina), or go to other cities like Al Ain and Dubai which is about 1.5 hours max away on a ‘real’ super highway. 

Odd Points: Abu Dhabi is a Muslim country, but one that’s quite moderate in terms of what’s forbidden. Still there are signs cautioning visitors to dress modestly, and not to engage in public displays of affection, or consume alcohol in public.

Also the taxi drivers who are an international mix from many countries like India, Pakistan, Philippines, Algeria etc. are the people you are most likely to have a long conversation with during a brief stay. You encounter foreigners at almost all service points – with hotels, shops, malls, restaurants all staffed by a similar mix of foreigners, that you will wonder where the local Abu Dhabi residents are!