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Safaricom share hits record high on Addis permit

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Safaricom share hits record high on Addis permit


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Safaricom headquarters on Nairobi’s Waiyaki Way. PHOTO | DIANA NGILA

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Summary

  • It marks one of the largest one-day gains on a single stock in the history of the Nairobi Securities Exchange (NSE).
  • The telco’s share price closed at a record average of Sh41.75 from Friday’s Sh39.50, giving it a market value of Sh1.67 trillion.

Safaricom #ticker:SCOM shareholders’ paper wealth rose by Sh90.1 billion yesterday as investors rushed to buy the company’s shares after it was awarded a licence to enter Ethiopia’s underserved telecoms market.

It marks one of the largest one-day gains on a single stock in the history of the Nairobi Securities Exchange (NSE).

The telco’s share price closed at a record average of Sh41.75 from Friday’s Sh39.50, giving it a market value of Sh1.67 trillion, the highest since listing at the Nairobi bourse in June 2008.

The consortium led by Safaricom, Vodafone, British development finance agency CDC Group and Japan’s Sumitomo said Monday they will start operations in Ethiopia next year after they beat South Africa’s MTN to the licence.

The rally has taken Safaricom’s share price gain to 45.5 percent over the past 12 months, bucking the general bear run trend on the NSE that has been fuelled by the Covid-19 pandemic.

“The rise was mainly driven by the news of entry into Ethiopia since investors see this as another opportunity for the telco to grow revenues,” said Sarah Wanga, AIB-AXYS Africa head of research.

Ethiopian officials announced on Saturday morning that a Safaricom-led consortium —which includes its South African parent firm Vodacom— won an $850 million (Sh91.7 billion) auction to acquire a new telecoms operating licence.

The consortium–Global Partnership for Ethiopia–beat its only competitor led by South Africa’s MTN Group whose $600 million (Sh64.7 billion) was deemed too low.

The entry of the consortium will end the monopoly of the State-owned Ethio Telecom. Safaricom will have a 56 percent stake in the consortium.

The telco’s fresh share price rally has lifted the value of the entire stock market –which it now dominates with a share of 62.3 percent— to Sh2.68 trillion, which is the highest level in 34 months.

The telco was the second highest gainer on the bourse, as foreign investors’ net buying on the bourse hit 136.864 million shares from the net selling of 133.189 million shares on Friday.

The timing of the news meant investors had the weekend to internalise the news, leading to increased activity that saw the share touch an all-time high of Sh43.45 early in yesterday’s trading session.

Late April news that a consortium led by Safaricom and another one by South Africa’s MTN Group were the only parties to make bids in the auction for two operating licences had already triggered excitement on Safaricom’s stock.

Ethiopia is home to more than 112 million people, making it the second largest country in Africa by population.

The market had largely been closed to external investors but the government started its new policy of opening the economy in 2019 through multiple reforms with the support of the International Finance Corporation.

The award of the licence to Safaricom and the planned sale of a minority stake in Ethio Telecom mark some of the boldest economic reforms in that country.

Entry into Ethiopia presents a significant growth opportunity for Safaricom that reported net earnings of Sh68.67 billion in the year ended March.

The company has dominated the Kenyan telecoms market but growth opportunities in the local industry are limited given the already high uptake of voice, mobile money and mobile data services.

Mobile phone penetration rate in Ethiopia, for instance, stood at 44 percent compared to Kenya’s 100.8 percent in the first quarter of 2019.

“In past years, we have seen the power of digital transformation and its impact on our customers. We believe by working with all stakeholders in Ethiopia, we can deliver a similar transformation while achieving a sustainable return to our shareholders,” Safaricom’s chief executive Peter Ndegwa said yesterday.

The telco hopes that Ethiopia will review its current laws and open up mobile money licence to foreign firms so that it can replicate Kenya’s M-Pesa success story in the Horn of Africa country.



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KQ resumes Mumbai flights after 4 months

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KQ resumes Mumbai flights after 4 months


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A Kenya Airways aircraft at JKIA. FILE PHOTO | NMG

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Summary

  • Kenya Airways will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.
  • The airline in a notice to its customers yesterday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

Kenya Airways #ticker:KQ will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.

The airline in a notice to its customers Monday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

The airline will then resume full operations on the route on September 20, flying three times per week on the Indian route, which is one of the most lucrative destinations on its network.

Passengers on the route will part with Sh46,000 ($419) for one-way air ticket on economy class seats from Nairobi to Mumbai- prices that are relatively the same compared to what it was charging before the Covid-19 pandemic.

“Welcome back onboard! Fly from Nairobi to Mumbai starting Thursday 16th September with normal schedules resuming from Monday 20th September 2021,” said the airline in a notice to its customers yesterday.

KQ Suspended passenger flights to and from Mumbai on April 30 until further notice, following a government directive on travel between India and Kenya due to a Covid-19 crisis in that country.

The airline said on Friday that passengers who had booked tickets after May 1, the date of the last flight from Mumbai to Nairobi, will have to change their plans.

Affected passengers, KQ said, could also take vouchers for the value of their fare for future travel within 12 months.

India has seen soaring infection rates in the recent days, since the discovery of a new virus variant. Last month, India put on lockdown one of the states following a spike in cases of Covid-19.

Other countries that have banned flights to India include France, the UK Bangladesh, Oman and Hong Kong that have banned travel to and from India or asked their nationals coming from the Asian country to isolate themselves in government-approved hotels.

India has so far detected 33,264,175 corona virus cases with the number of deaths hitting 442,874 as at September 13.

A large number of patients from Kenya also travel to India every year for specialised medical treatment, especially cancer care, helping to drive medical tourism in the densely populated country that boasts affordable and easily accessible healthcare.



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Lower import volumes push mitumba prices to new highs

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Lower import volumes push mitumba prices to new highs


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Man pulls a cart loaded with second-hand clothes at Gikomba Market in Nairobi. FILE PHOTO | NMG

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Summary

  • Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.
  • Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.
  • Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

The average price of a tonne of second-hand clothing items imported into the country crossed the Sh100,000 mark for the first time last year on reduced volumes in the wake of safety protocols and guidelines to curb spread of coronavirus.

Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.

Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.

Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

Last year’s drop was the first dip since 2011 when 76,533 tonnes were shipped in compared with 80,423 tonnes the previous year, the official data collated by the Kenya National Bureau of Statistics (KNBS) shows.

The import bill for the merchandise amounted to Sh12.24 billion, a drop of 31.11 percent, or Sh5.53 billion, year-on-year.

TIn imposing the temporary ban on used clothes, Kebs had applied a standard which prohibits buying second-hand clothes from countries experiencing epidemics to ensure disease-causing microorganisms are not imported into Kenya.

Higher quality and relatively lower prices for mitumba has continued to drive demand for used clothes at expense of locally-made products amid higher margins enjoyed by traders largely operating in informal markets.

The lucrative second-hand clothing market has seen traders from China —a key source market for the merchandise —open shops in Gikomba, Kenya’s largest informal market for mitumba, in recent years to cash in rising demand.

Earnings from exports of articles of apparel and clothing accessories fell 5.32 percent to Sh32.92 billion last year compared with 2019, data indicates.



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Court backs Atwoli union in horticulture membership feud

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Court backs Atwoli union in horticulture membership feud


Cotu boss Francis Atwoli

Cotu boss Francis Atwoli. FILE PHOTO | NMG

Summary

  • A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.
  • Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.

Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

Mr Atwoli is the secretary-general of KPAWU. The rival union claimed KPAWU had encroached on its area of workers’ representation.

Justice James Rika, however, dismissed the claim and ruled that the dispute should have been taken through conciliation, and was therefore presented in court prematurely.

He also stated that Kefhau must go beyond its registration and recruit sufficient members from the employers, to be granted recognition and organisational rights.

“Registration on its own, does not afford the claimant (Kefhau) recognition. Until there is proof that Kefhau has satisfied Section 54 of the Labour Relations Act, the status quo must be maintained,” said the judge.

“Kefhau must recruit at least 50 percent plus one, of the unionisable employees in the floriculture and horticulture industry, members of the Agricultural Employers Association to be considered for recognition,” he stated.

He noted that there is a Recognition Agreement and CBA, binding Mr Atwoli’s union and Agricultural Employers Association, affecting 73 Flower Growers Group of employers, and over 60,000 employees.

“It is objectionable for Kefhau to be allowed organisational rights, and the legitimacy to receive trade union dues and agency fees, from over 60,000 employees, just on the strength of registration as a trade union,” said the judge.

Kefhau wanted the court to declare that it is the sole trade union, which is allowed by its constitution to carry out activities in the export floriculture and vegetable industry, and an order restraining Mr Atwoli’s from representing workers in that area.



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