Category Archives: Middle East

Kenya’s Money in the Past: Diplomatic Engagement

This week saw the publication of “Kenya’s 50 years of Diplomatic Engagement, from Kenyatta to Kenyatta,” a book on the history of the diplomatic services and foreign policy in Kenya.

Edited by Dr. Kipyego Cheluget, Kenya’s Assistant Secretary General at COMESA, it is a collection of writings by different authors including foreign ambassadors. It is the result of a nine-year journey that came from an idea that came when he was Director of the Foreign Service Institute – to document the history of the diplomacy in Kenya. And he then set out to travel around the county, interviewing and recording former ambassadors and diplomats such Munyua Waiyaki, Njoroge Mungai and even unofficial ones like politician Mark Too. Some of them have since passed away like Bethuel Kiplagat and Phillip Mwanzia, and whose widows were present at the book launch.

The Chief Guest was Former Vice President, Stephen Kalonzo Musyoka who has also served as a Minister for Foreign Affairs and Minister for Education and he said that to upgrade Kenya’s  diplomatic performance, the country should reward career diplomats and have them, not election losers, as Ambassadors, and legislate a 70:30 ratio of professionals over politicians in such posts, a reverse of the current imbalance. The event had panel talks with former ambassadors on topics like peace-building in Ethiopia, Somalia and the East African region, using sports as a tool of diplomacy, combating apartheid, the lost years of engagement with Russia shaped by the Cold War and how the pioneering diplomats worked through trial and error for decades without an official foreign policy.

The MC for the event at Taifa Hall of the University of Nairobi, Nancy Abisai said the only good books is a finished book, and Kenya’s Cabinet Secretary for Education Dr. Amina Mohamed, added that, following a challenge by President Kenyatta, her Ministry was in the process of setting up a unit for the publication of Kenyan memoirs and which would be operational by January 2019. Former Vice President Moody Awori, who at 91 is still an active Chairman of Moran, the publishers of the book, said they were looking for more scripts to turn our more such books.

Excerpts from early sections of the book and launch

  • It has never been right to say that Kenya’s foreign policy is a “wait and see” one. Diplomats were able to negotiate to host a combined World Bank/IMF meeting in 1973 and for UNEP to have its headquarters in a newly independent African country – Ambassador Francis. Muthaura.
  • Njoroge Mungai initiated steps for President (Mzee) Kenyatta to be nominated for the Nobel Peace Prize in 1972 and Singh Bhoi drafted the dossier.
  • Dennis Afande opened the Kenya Embassy in Jeddah, Saudi Arabia in February 1977. He was the only employee there for four months and the only signatory to the Embassy bank account for the period.
  • When Paul Kurgat went to apply for his scholarship visa at the Nairobi Russian embassy, in 1984. he was arrested and questioned about links to Oginga Odinga. He was later to return to Russia as Kenya’s Ambassador in 2010.

The book is available in local bookshops, such as the University of Nairobi one, at a cost of Kshs 1,395 (1,200 + VAT) and a digital version is also available on Amazon for $8 (~Kshs 800).

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.