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The East African : Feb 9th 2015
40 SLOW GROWTH OF INDUSTRY Law to open up East African skies still under debate Libe≥alsation of ai≥ se≥vices will eliminate ≥est≥ictions and p≥omote ease of movement by ai≥ By CHRISTABEL LIGAMI Special Correspondent T he cost of air travel in East Africawill not go down any time soon due to delays in the liberalisation process of the air space. The five partner states are yet to agree on the ownership of aircraft and operation control by the eligible air operators in the region. This means that East African countries will continue relying on bilateral agreements to access each other’s air space. . Barry Kashambo, executive di- rector of theEast African Community’s Civil Aviation Safety and Security Oversight Agency (Cassoa), said although the regulations to implement the liberalisation of air services have been developed, they await the conclusion of consultations on a single sub-regulation regarding ownership of aircraft and operation control of eligible operators. “It is anticipated that consensus will be reached in the near future to allow implementation of the regulations. But all indications are that partner states are committed to having this process concluded as soon as possible,” said Mr Kashambo. Liberalisation of air services is aimed at eliminating restrictions and providing guiding principles that will promote and ease movement of persons, goods and cargo by air. “The overall objective is to in- crease the air traffic capacity and reduce frequency coststo the passenger and other stakeholders,” said Mr Kashambo. “The eligible operators such as those in Kenya will then access a wider market.” The regulations have been de- veloped in compliance with the Yamoussoukro Decision of 1999. Mr Kashambo said partner states will be expected to grant each other the free exercise of the rights of the first, second, third, fourth and fifth freedoms of the air on scheduled and non-scheduled passenger, cargo and or mail flights performed by an eligible airline to or from their respective territories. In case of tariff increases for the carriage of passenger, cargo and mail, there shall be no approval required by the aeronautical authorities of the state parties concerned. The airlines shall simply file such tariffs before competent authorities 30 working days before they enter into effect. Samuel Nyandemo, an economist at the University of Nairobi, saidthat for the EAC to effectively benefit from economies of scale it has to have a single air space “Liberalising East Africa’s air space will have an added advantage of mobilisation of the necessary market support of key partners such as the EU,” said Dr Nyandemo adding that it will also increase cooperation in airline operations and code-sharing and drive cross-border investment in regional airlines. Industry experts say that 80 per cent of traffic in Africa is served by non-African airlines. Waturi Matu, co-ordinator ofEast African Tourism Platform said the high cost of air travel across the region is hurting the growth of the tourism industry. “Flying across the EAC bloc is expensive compared with The EastAfrican BUSINESS FEBRUARY 7-13,2015 Rwandai≥ now to fly to South Af≥ica By ISAAC KHISA The EastAfrican RWANDAIR will unveil flights to two new Southern African destinations starting next month. RwandAir will operate three flights per week to Zambia starting March 27, enroute to Johannesburg, with fifth freedom rights, and later Zimbabwe, once the ongoing negotiation on landing and route rights are completed. RwandAir already operates daily flights to Johannesburg. “The number of travellers from East Africa heading to the Southern Africa states is increasing. Zambia’s economy is improving and tourism arrivals are on the rise,” John Mirenge, RwandAir’s chief executive officer said. Zambia’s economic growth is pro- Jomo Kenyatta International Airport is one of the busiest in the bloc. Picture: File AIR TRAFFIC Statistics show that air traffic in Africa has been growing at about 6 per cent a year over the past decade, with growth estimated to be strongest in Southern and East Africa.T he three categories of air travel including domestic, regional and intercontinental have all grown. International traffic within sub- other regions across the continent and globally,” said Ms Matu adding that Kampala is the most expensive destination in the region. “So we end up losing because of the high cost of tickets,” she said. Flying from one of the EAC countries to another costs between $220 and $350 minus taxes, for a return trip. The high cost of travel in the re- gion is as a result of lack of uniform airspace policies and high airport fees across the region. Statistics show that air traffic in Africa has been growing at about 6 per cent a year since the lpast decade, with growth estimated to Saharan Africa (including EAC) grew slightly faster, at an average of 6.5 percent per year. Factors constraining theindustry include the uncompetitive domestic and Bilateral Air Services Agreements regulatory regimes, fiscal policies. such as airport taxes and limited subsidisation. be strongest in Southern and East Africa. The three categories of air travel domestic, regional and intercontinental. International traffic within sub-Saharan Africa (including EAC) grew slightly faster, at an average of 6.5 percent per year. Factors constraining the EAC in- dustry include the uncompetitive domestic and Bilateral Air Services Agreements (BASAs) regulatory regimes, fiscal policies such as airport taxes and limited subsidisation on a sector which is otherwise highly subsidised globally, high Insurance premiums, management inefficiencies, security concerns and safety oversight. jected to rise from 6.5 per cent in 2014 to 7 per cent this year driven mainly by agriculture, manufacturing, construction and mining. Reports shows that Zambia, which recorded an increase in the number of international arrivals by 6.7 per cent to 912,576 in 2013, was projecting increased tourist arrivals of 1.2 million in 2014 with some of the arrivals drawn from Kenya and Tanzania. Zambia attributes the increase in tourist arrivals to improvement in the aviation sector due to the entry of new airlines into the country including low cost carrier-Fastjet. Zimbabwe’s tourist ministry said that the country’s tourist arrivals maintained an upward trend, surging from 1.8 million foreign visitors in 2013 to two million last year, following the introduction of a single visa by Zimbabwe and Zambia dubbed the Kaza Visa which costs only $50 and allows tourists to visit the two states. Mr Mirenge said the airline is also eyeing flights to Abidjan and Cotonou in Ivory Coast and Benin, respectively, during the year. RwandAir’s move is likely to stir competition with the Kenya Airways and Ethiopian Airlines, which have been dominating the routes. Coming soon: Sho≥t-te≥m unsecu≥ed loans by phone By A CORRESPONDENT The EastAfrican KENYANS, UGANDANS and Zambians may soon have access to short-term unsecured loans on their mobile phones. Microfinance company afb, which has been operating in Kenya since 2012, plans to introduce the product through mobile phone partner Airtel as soon as approval is obtained from the Central Bank of Kenya. In Zambia, partnership will be with MTN. The loans are already available in Tanza- The loans — already in Tanzania — are repayable in 7-28 days. Pic: File nia. In partnership with Airtel Tanzania, afb launched Timiza in November 2014; the service allows Airtel Money customers access to quick loans on their mobile phones. At an interview in Nairobi last week, afb group chief executive Karl Westvig said they were very happy with the company’s growth in the region. “We already have 500,000 Tanzanians using our product. The loans are small and therefore low-risk, at an average of $3 per loan,” he said. The loans are repayable in seven to 28 days — the customer chooses their preferred repayment period. Currently, the average is 16 days. Two-thirds of the loans have been taken up by small businesses and market people that use the money to buy stock for daily trading. There is a 10 per cent risk-based fee charged, followed by 0.5 per cent per day. No previous savings are required, and the amount available increases. Established in Ghana in 2010, afb has four core business divisions: Cards, loans, mobile and insurance. afb currently has 1,500 staff across five countries. The call centre in Nairobi currently has 250 staff members. “In Kenya, our retail credit cards are grow- ing at a rate of 10,000 new approved subscribers per month, with 30,000 applications. We have 100,000 cards in the market so far, through our 440 retail partners who include Naivas, Mulleys, Text Book Centre and Woolworths,” Mr Westvig said. Last August, the company launched a business cash advance product for small and medium enterprises in Kenya. The financial product offers eligible SMEs unsecured cash advances ranging from Ksh50,000 ($550) to up to Ksh5 million ($55,000), to help with working capital for their business growth and expansion. For the advance, no security is required and the full application process takes as little as 24 hours.
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