Major International Business Headlines Brief::: 06 May 2022
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Major International Business Headlines Brief::: 06 May 2022
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ü Interest rate hikes: Shares fall in Asia and the US
ü UK government sets out plans to rein in Big Tech
ü Gucci stores to accept cryptocurrencies in US
ü Cocaine found in coffee sent to Nespresso plant
ü Elon Musk lines up $7bn backing for Twitter deal
ü Interest rates: What are they and how high could they go?
ü McColl's convenience store chain on brink of collapse
ü Warning of economic downturn as interest rates rise
ü Nigeria: Price of Jet Fuel Rises Further, Hurting Nigerian Airlines
ü Nigeria: 61 Years After, Nigeria's Foremost Airline, Aero Contractors Goes Under
ü Nigeria: CBN Caution Banks On Benin Republic Linked Transactions
ü Tanzania: Geita Seeks 10.8bn/ - to Improve Infrastructures in Primary Schools
ü Tanzania: Tarura Earmarks 1059.2km of Roads for Reconstruction in Geita
ü Tanzania: Govt Keeps Hands Off Private School Fees
ü Malawi: Airtel Malawi Hits 1, 000 Milestone for Mobile Money Branches
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Interest rate hikes: Shares fall in Asia and the US
Stock markets in Asia and America have tumbled after the US central bank this week announced the biggest interest rate rise in 22 years.
The sell-off comes as worries intensified over how rising prices - and the Federal Reserve's steps to rein them in - will affect economic growth.
Major share indexes in Hong Kong and mainland China dropped on Friday in Asia.
That came after shares in New York fell sharply, led by technology stocks.
Hong Kong's benchmark Hang Seng index fell by 3.6%, while shares on the Shanghai Stock Exchange were down by 2.3%. Australia's ASX 200 was 2.4% lower.
Those falls followed the Dow index, which includes big names such as Apple and Nike, sliding on Thursday by more than 1,000 points to end 3.1% lower.
The wider S&P 500 fell 3.6%, while the tech-heavy Nasdaq plummeted by almost 5%.
The losses wiped out the gains the markets had enjoyed on Wednesday, after the Federal Reserve announced it was raising its benchmark rate by half a percentage point to 0.75% to 1%.
That move, which will make borrowing more expensive, had been expected.
Analysts said investors were relieved that the bank had not moved even more aggressively, with Federal Reserve chairman Jerome Powell saying that a bigger rate hike was not under "active consideration".
But Thursday's losses suggested that worries remain about whether the Fed will be able to slow economic activity enough to cool price increases without tipping the economy into recession - defined as the economy getting smaller for two consecutive quarters.
Rising prices are also being driven by factors outside the central bank's control, such as spiking energy prices due to the war in Ukraine.
"Yesterday's [markets] explosion higher was completely comical. It was ridiculous. His comments did not justify the move that we saw," said Kenny Polcari, managing partner at Kace Capital Advisors.
Slowdown warning
While Mr Powell said he was confident the US economy was strong enough to handle the impact of higher rates, investors are concerned that the rising cost of living is starting to hit US households and will slow consumer spending.
In recent weeks, big firms such as Amazon have warned of slowing growth. Government figures this month showed the US economy contracted by 1.4% in the first three months of the year.
Shares in companies reliant on consumer spending were hit especially hard on Thursday.
On the Dow, Nike tumbled 5.9%, Apple fell 5.5% and Home Depot fell 5.1%.
EBay tumbled more than 11%, while Etsy fell almost 17% a day after both firms forecast slower growth than analysts had expected.
Social media platform Twitter bucked the overall market trend, rising 2.5% as billionaire Elon Musk lined up investors to help fund his buyout.
But shares in Mr Musk's electric car company, Tesla, tumbled more than 8%.
The sell-off deepened a downturn in US financial markets since the start of the year. The Dow is down almost 10% since January, while the S&P 500 has dropped 13% and the Nasdaq has tumbled 22%.-BBC
UK government sets out plans to rein in Big Tech
Large tech companies such as Google and Facebook will have to abide by new competition rules in the UK or risk facing huge fines, the government said.
The new Digital Markets Unit (DMU) will be given powers to clamp down on "predatory practices" of some firms.
The regulator will also have the power to fine companies up to 10% of their global turnover if they fail to comply.
Besides boosting competition among tech firms, the rules also aim to give users more control over their data.
The BBC approached several of the big tech firms, including Apple, Meta and Google, but has received no response.
The Department for Digital, Culture, Media and Sport (DCMS) said as well as large fines, tech firms could be handed additional penalties of 5% of daily global turnover for each day an offence continues.
For companies like Apple that could be tens of billions of US dollars.
"Senior managers will face civil penalties if their firms fail to engage properly with requests for information," the government said.
However, it is unclear when exactly the changes will come into force, as the government has said the necessary legislation will be introduced "in due course".
Europe agrees new law to curb Big Tech dominance
Digital minister Chris Philp said the government wanted to "level the playing field" in the technology industry, in which a few American companies have been accused of abusing their market dominance.
"The dominance of a few tech giants is crowding out competition and stifling innovation," he said.
As well attempting to hold Big Tech to account, the DMU will look to give people more control over how their data is used by tech firms - for example with targeted personalised adverts.
It will also make it easier for people to switch between phone operating systems such as Apple iOS or Android and social media accounts, without losing data and messages.
Critics have called such closed systems "walled gardens" that lock consumers into using products from a specific company.
Google's search engine, which is currently the default search engine on Apple products, will also be looked at by the regulator, the government said.
It added it wants news publishers to be paid fairly for their content - and will give the regulator power to resolve conflicts.
This move is in response to friction between Meta, Google and news publishers. The argument is that while many local and national news organisations struggle to survive, Big Tech companies are posting record profits - and raising advertising revenue from the stories they produce.
Meta and Google argue that the relationship is symbiotic, that they direct traffic towards news organisations.
Last year the situation escalated, when a proposed law in Australia looking to "level the playing the field" resulted in Facebook temporarily blocking Australian news organisations - before an agreement was reached.
The UK government said its new rules could increase the "bargaining power" of national and regional newspapers.
The issue of big tech and competition has been troubling the authorities for quite some time.
There's no question that a handful of giants hugely dominate the market and hoover up considerable profits.
They have a captive market and they don't want to share it. Google search is so popular "to google" is a commonly used verb. Around 90% of all internet searches are on Google's search engine. But many have queried whether one company should have such a dominant position over a crucial part of the internet.
It also leaves businesses with little choice. Want to advertise to people searching for football boots in your area? Google would be the obvious choice. But critics argue that that its monopoly means the company can charge what it likes - and that's ultimately bad for a healthy and competitive economy.
The UK's new regulator has decided to focus the minds of these firms with eye-watering fines for not allowing fair competition - 10% global turnover and an extra 5% per day if the offence continues. That is mega money - even for companies worth trillions of dollars. It's enough to get their attention.
Also included in the plans is a move to give firms like Meta and Apple "strategic market status", which will mean they will have to report takeovers before they complete to the Competition Markets Authority (CMA) for potential investigation.
Big Tech has long been criticised for buying up competition, as part of a strategy to "copy, acquire, kill".
The criticism here is that fledgling business are bought up before they have the chance to get too big - and threaten the monopoly position of these companies.
Separately, it had been rumoured that the DMU would not be given a legal footing - and would therefore lack bite, however the government has said it will introduce legislation to put the regulator on a statutory footing in "due course."
The consumer group Which? said it was "essential that the Digital Markets-BBC
Gucci stores to accept cryptocurrencies in US
Italian luxury brand Gucci will start accepting payments in cryptocurrencies in some of its stores in America.
Customers will be able to pay using a number of cryptocurrencies, including Bitcoin, Ethereum and Litecoin.
The service will be rolled out later this month at some of its flagship outlets, including Rodeo Drive in Los Angeles and New York's Wooster Street.
Gucci, owned by France's Kering, joins a growing number of companies that have started to accept virtual currencies.
The firm said it will also take payments in Shiba Inu and Dogecoin - a so-called "meme" cryptocurrency that was originally created as a joke.
Customers paying in stores with cryptocurrencies will be sent an email with a QR code to use with a digital asset wallet - a financial transaction app that runs on mobile devices.
QR - or quick response - codes are the black and white, barcode-like squares that can be read by mobile phones and have been used increasingly widely since the start of the pandemic.
The brand said it plans to introduce the policy to all the North American stores it operates directly in the near future.
The announcement by such a high-profile brand marks another step forward for the acceptance of cryptocurrencies by mainstream businesses.
Gucci is the latest big name to announce that it will take cryptocurrency as payment.
Some of the world's biggest brands now accept digital currencies, including technology giant Microsoft, US telecoms firm AT&T and coffee chain Starbucks.
In the last year Bitcoin has also become legal tender in two countries - El Salvador and the Central African Republic.
Since El Salvador said it would allow consumers to use the cryptocurrency in all transactions, alongside the US dollar, the International Monetary Fund has urged it to reverse its decision.-BBC
Cocaine found in coffee sent to Nespresso plant
Swiss police say they have seized 500kg of cocaine from a shipment of coffee that was sent to a Nespresso factory.
Workers at the plant in Romont alerted the authorities after finding white powder in sacks of coffee beans.
Police later found more of the drug in five shipping containers. An initial investigation suggested the shipment had come from Brazil.
A Nespresso statement said production of coffee capsules at the plant had not been contaminated by the drug.
"We want to reassure consumers that all our products are safe to consume," the coffee company said.
The seized cocaine was 80% pure and had an estimated street value of nearly €50m ($53m; £43m).
"It's definitely a big seizure for the canton of Fribourg, one can say an extraordinary catch," said Marc Andrey, head of security for the region.
The cocaine was probably destined for the European market, police said.-BBC
Elon Musk lines up $7bn backing for Twitter deal
Billionaire Elon Musk has lined up 19 new investors to help with his $44bn (£35.5bn) purchase of Twitter.
The commitments, totalling $7.1bn, will allow Mr Musk to reduce his own risk in the deal which has been approved by Twitter's board but not completed.
Oracle co-founder and Mr Musk's friend, Larry Ellison, is the single biggest contributor with $1bn.
Other investors include renowned Silicon Valley venture firm Sequoia Capital and crypto exchange Binance.
There is still some uncertainty that Mr Musk - also chief executive of electric car maker Tesla and rocket company SpaceX - will pull off his planned buyout.
Mr Musk, whose rank as the world's richest person is tied to the value of his stake in Tesla, has said he plans to finance the purchase through a mix of loans, investments and cash.
In recent weeks, he sold about $8.5bn worth of Tesla shares, money that is expected to be used to fund the deal. He has lined up $13bn in loans from banks and is also borrowing against his Tesla holdings.
The new $7.1bn commitment will allow him to reduce that debt from an initially proposed $12.5bn to $6.25bn, according to the government filing.
Who are the investors?
The investment group includes massive firms such as Fidelity, which is known for managing retirement accounts. Meanwhile, Sequoia Capital has backed technology firms since the 1970s, including Apple, Google and Airbnb.
Many of the investors also have previous experience with Mr Musk.
Mr Ellison, for example, sits on the board of Tesla, while Dubai-based Vy Capital, which is putting in $800m, has backed Mr Musk's tunnel construction start-up The Boring Company.
Binance chief founder Changpeng Zhao shared news of the deal on the social media site, casting it as a step toward "Crypto Twitter".
He called his $500m investment a "small contribution to the cause".
Qatar Holding, a sovereign wealth fund, is contributing $375m, while Saudi Arabian investor Prince Alwaleed bin Talal, who had initially opposed the buyout, also confirmed he would retain his $1.9bn stake in Twitter, writing that Mr Musk would be an "excellent leader" for the site.
"Kingdom Holding Company and I look forward to roll our ~$1.9bn in the "new" Twitter and join you on this exciting journey," he added.
Mr Musk will also continue to hold talks with existing shareholders of Twitter, including the company's former chief Jack Dorsey, to contribute shares to the proposed acquisition, according to the filing.
'The financing is a huge risk'
Mr Musk, who has more than 90 million followers on Twitter, surprised many in April when it was revealed he was the social media site's largest shareholder.
He ultimately rejected a seat on the board in favour of taking it private, saying the move would make it easier to improve the platform.
While his plans are unclear, he has floated ideas such as making some pay for the service, increasing transparency over how Tweets appear and cleaning up spam accounts.
Saudi Prince Alwaleed bin Talal speaks during a press conference on May 11, 2017, in the Red Sea city of Jeddah.
CNBC reported on Thursday, citing sources, that he also plans to take on the role of chief executive temporarily.
Shares in Twitter rose after the new commitments were revealed, but continue to trade lower than Mr Musk's buyout price of $54.20 - a sign of lingering questions about the deal.
Shares in Tesla were down more than 8%. The price has sunk more than 15% over the last month.
How Elon Musk might change Twitter
Who is Elon Musk?
A big decline in their worth could put the purchase at risk, said David Yoffie, professor at Harvard Business School.
"It's by no means a sure thing that he will actually close on this deal," he says. "The financing is a huge risk."
But Dan Ives, analyst at Wedbush Securities, said the new investor group will help reduce those fears.
"This was a smart financial and strategic move by Musk that will be well received across the board," he wrote, adding that it "shows the Twitter deal is now on a glide path to get done by the end of this year."-BBC
Interest rates: What are they and how high could they go?
Interest rates have been raised from 0.75% to 1% - their highest level for 13 years.
The Bank of England hopes to slow the rate at which prices are increasing. It warned that inflation would be over 10% by the end of the year - something not seen since 1982.
Why are prices and interest rates rising?
Prices are going up quickly worldwide, as Covid restrictions ease and consumers spend more.
Many firms have problems getting enough goods to sell. And with more buyers chasing too few goods, prices have risen.
There has also been a very sharp rise in oil and gas costs - a problem made worse by Russia's invasion of Ukraine.
Why are prices rising so quickly?
One way to try to control rising prices - or inflation - is to raise interest rates.
This increases the cost of borrowing and encourages people to borrow and spend less. It also encourages people to save more.
However, it is a tough balancing act as the Bank does not want to slow the economy too much.
Since the global financial crisis of 2008, UK interest rates have been at historically low levels. Last year, they were as low as 0.1%.
Interest rate rises
How high could interest rates go?
Many people expect UK interest rates to reach 1.25% this year - but they could go higher.
The Office for Budgetary Responsibility (OBR) - the government's independent economic advisor - looked at what might happen if the UK were to experience higher and longer lasting inflation.
This can happen when people think price rises will continue - businesses raise prices to keep making a profit and workers demand wage increases to keep up.
If this happens UK interest rates could hit 3.5%, the OBR said.
How do interest rates affect me?
Mortgages
About a third of UK adults have a mortgage. Of those, three-quarters have a fixed mortgage, so will not be immediately affected. The rest - about two million people - will see their monthly repayments rise.
Those on a typical tracker mortgage will have to pay about £25 more a month. Those on standard variable rate mortgages will see a £16 increase.
This comes on top of increases following other recent rate rises.
Compared with pre-December 2021, tracker mortgage customers could be paying about £90 more a month, and variable mortgage holders about £57 more.
Credit cards and loans
Even if you don't have a mortgage, changes in interest rates could still affect you.
Bank of England interest rates also influence the interest charged on things like credit cards, bank loans and car loans.
Even ahead of this latest rise, the average annual interest rate was 20.3% on bank overdrafts and 18.01% on credit cards in March. Lenders could decide to increase these fees now that interest rates have risen.
Savings
The Bank's decisions also affect the interest rates people earn on their savings.
Individual banks usually pass on any interest rate rises - giving savers a higher return on their money.
However, for people putting money away, interest rates are not keeping up with rising prices.
How does the Bank of England set interest rates?
Interest rates are decided by a team of nine economists, the Monetary Policy Committee.
They meet eight times a year - roughly once every six weeks - to look at how the economy is performing.
Their decisions are always published at 12:00 on a Thursday.
Are other countries raising their interest rates?
The UK is affected by prices rising across the globe. So there is a limit as to how effective UK interest rate rises will be.
However, other countries are taking a similar approach, and have also been raising interest rates:
US: raised rates to 1% - its biggest interest rate increase in more than two decades-.-BBC
McColl's convenience store chain on brink of collapse
Convenience store chain McColl's is on the brink of collapse, potentially placing thousands of jobs at risk.
The retailer said it was "increasingly likely" it would fall into administration unless talks around a rescue deal were successful.
The statement on Thursday came after Sky News reported the company could call administrators in on Friday.
More than 16,000 people are employed by McColl's, which also has a partnership with supermarket Morrisons.
The company wrote that without any fresh funding in the short-term, the group would likely "be placed into administration with the objective of achieving a sale of the group to a third-party purchaser and securing the interests of creditors and employees".
But the chain also stressed on Thursday that discussions are still ongoing.
It added that it wanted to create a "stable platform for the business going forward".
The 1,400-store group has a wholesale tie-up with Morrisons, as well as Martin's newsagents, with a strategy centred around an image of a "neighbourhood retailer".
According to its website, it serves about five million customers each week, having been founded in Glasgow in 1901.
Co-op store sales to McColl's approved
Pret, McColls, Welcome Break in minimum wage fail
But earlier this week, the listed company warned that its shares would be suspended because it was unable to meet the deadline for filing its annual results.
McColl's said that its accounts would not be signed off in time to meet the deadline.
Teresa Wickham, a former director at Safeway, told the BBC's Today programme that McColl's had been "caught in a difficult place, particularly with Covid".
She said the pandemic came at a time when the firm was shifting its business model from running traditional convenience stores to selling more fresh produce in its partnership with Morrisons.
Stores that had done this had done well, Ms Wickham said, as shopping habits shifted to buying more locally in the coronavirus crisis, but the chain had lacked investment, and only a small proportion of its stores had made the shift.
"They didn't quite have enough fresh produce, and also at the time during the pandemic we switched very quickly to online shopping," she said.
"It will survive, but whether all of it survives is a difficult thing to say."
Meanwhile, Sky News reported that Morrisons, one of Britain's biggest supermarkets, had proposed a deal to McColl's lenders, which involved the supermarket injecting funding.
Morrisons declined to comment when contacted by the BBC.
McColl's successfully raised £30m from shareholders last year to invest in driving the expansion of its Morrisons Daily convenience stores, but at the time it warned that footfall had been hit by the coronavirus pandemic.
Around the same time, it also faced allegations from the government that it had failed to pay some of its workers the UK minimum wage.
Pret, McColl's and Welcome Break said the underpayments were historic errors and staff had been swiftly reimbursed.
The businesses were made to pay back the money as well as being fined £3.2m over breaches, such as deducting pay from wages for uniforms and expenses, or failing to pay the correct apprenticeship rate.-BBC
Warning of economic downturn as interest rates rise
The Bank of England has warned the UK faces a "sharp economic slowdown" this year as it raises interest rates to try to stem the pace of rising prices.
Rates rose to 1% from 0.75%, their highest level since 2009 and the fourth consecutive increase since December.
Inflation - the rate at which prices rise - is at a 30-year high and set to hit 10% by the autumn as the Ukraine war drives up fuel and energy prices.
As a result, households are reining in their spending which is hitting growth.
Following the latest rise in interest rates, two million homeowners will see an immediate increase in their monthly mortgage repayments with other loans potentially getting more expensive too.
But Bank of England governor Andrew Bailey defended raising rates at a time when the cost of living is increasing, saying that the risk of letting inflation get out of control was higher.
Inflation reached 7% in March - more than three times the Bank's target of 2%.
"We are in a very difficult position at the moment," Mr Bailey told the BBC.
"We're walking a very narrow path now between inflation on the one side, which is much higher than we want it to be, and on the other side very big external shocks which are causing a big loss of real income for people and businesses in this country."
As a result of the soaring prices, the Bank's Monetary Policy Committee (MPC) - which sets rates - said there had been "a material deterioration in the outlook" for UK economic growth.
The bank's policymakers now expect the UK economy to shrink rather than expand in the final three months of this year. It is also expected to contract by 0.25% in 2023, down from its previous forecast of 1.25% growth.
How high could UK interest rates go?
Why are prices rising so quickly?
While that would not technically be a recession - defined as the economy getting smaller for two consecutive quarters - it would leave the UK at a real risk of one.
Moreover, the MPC believes unemployment will rise as businesses start to struggle, climbing from 3.6% this year to around 5% in 2024.
Raising rates makes it more expensive for consumers and businesses to borrow. The idea is that people start spending less, helping cool demand for goods and services and, in turn, slowing the pace of price rises.
But economists have warned that increases in interest rates may have little effect given rising global oil and gas prices.
The Bank's MPC expects inflation to hit 9% in the coming months - up from its previous forecast of 8% - and to reach 10.25% by the end of the year.
It said the impact of the Ukraine war on household gas and electricity prices was largely to blame, following the increase in the energy price cap in April and a further expected rise in October which could push household bills up to £2,800 a year.
Mr Bailey said there could be a 40% rise in the price cap based on current prices.
"I must say that I recognise the hardship this will cause for many people in the UK, particularly those on the lowest incomes, often with little or no savings," he said.
Following the Bank's forecasts the pound fell by more than a cent against the US dollar to below $1.24, its lowest level since the peak of the coronavirus pandemic in mid-2020.-BBC
Nigeria: Price of Jet Fuel Rises Further, Hurting Nigerian Airlines
Many Nigerian airlines were shocked yesterday when they were informed by oil marketers that aviation fuel had risen from N500 per litre to N680 per litre.
Owing to this, airline operators have expressed fear that their operations would be squeezed due to high cost of the product, which is now over 60 per cent of their cost of operation.
The marketers published the new prices as follows: Lagos, N600 per litre, Abuja, N650 per litre and Kano N680 per litre.
But the Airline Operators of Nigeria (AON) which is billed to meet today, hinted that airlines might not pass the high cost of aviation fuel to their customers, but could decide to take the matter to government.
A top official of one of the airlines told THISDAY that despite the resolution reached by industry stakeholders in March, that the price of fuel be pegged at N500, pending the determination of a substantive uniform price, the fuel marketers decided to increase the price to N680.
The official told THISDAY that willy-nilly some airlines might not be able to meet up with the price increase because many of them are still recovering from the very low passenger traffic in the first quarter of 2022, adding that the services of many of the domestic carriers would be impacted negatively and many airlines might have no choice than to shut down as they threatened to do in March because they would not be able to cope with the high cost of operations.
The Head of Communication of Dana Air, Kingsley Ezenwa told THISDAY that AON would be meeting today to deliberate over the increase.
He, however, expressed optimism that the airlines would not pass the increase to their customers but would reach out to government and marketers for the downward review of the new prices.
"For now we have not taken any decision. We just find a way to engage the marketers and the government on the ways to solve this problem. We don't want to push it to the flying public. Everything will continue normally. There is yet no official statement but the impact on our operations will be too much to bear and that is more reason why airlines want to engage government and marketers to find ways to resolve this. It is a big issue. AON needs to step action and engage the government. We want everybody to fly," Ezenwa said.
During one of the meetings held in March at the instance of the House of Representatives Committee on Aviation, the AON threatened to shut down operations over the non-availability of aviation fuel for their airplanes, as fuel marketers gave reasons why they hiked the pieces.
AON had told the lawmakers then that due to the increase in price of fuel and its unavailability, its members won't be able to sustain their operations and condemned the marketers for refusing to disclose the actual amount they buy aviation fuel per litre.
Currently the base fare of 45 minutes to a one-hour flight is N50, 000, which air travellers described as exorbitant, prompting many tavellers to shun the airports and there are indications that any increase to that base fare would further reduce passenger traffic at the airports.-This Day.
Nigeria: 61 Years After, Nigeria's Foremost Airline, Aero Contractors Goes Under
Barring any urgent intervention, Nigeria's foremost carrier, Aero Contractors may be on its way out of the skies after over 61 years of flight operations.
With only two aged aircraft, Bombardier Dash 8-300 and Boeing 737-500 in their early 30s and totally bereft of operating cash, the airline is now on its knees about to shut the door for scheduled services.
Aero Contractors, which provided shuttle service for oil and gas industry for decades and extended its service to scheduled flight operations since 2000 has become moribund with over N50 billion debt overhang.
THISDAY investigations revealed that economic recession occasioned by the COVID-19 lockdown and protracted low season after December heavy passenger traffic demand, culminated to the financial drought of the airline.
It was learnt that currently, the airline finds it difficult to fuel its existing fleet.
The Managing Director of the airline, Captain Abdullahi Mahmood in a telephone interview with THISDAY confirmed the precarious state of the airline and identified factors that led to debilitating condition of the indigenous carrier.
Captain Mahmood said that the airline could stop operation at any time because the management is finding it increasingly difficult to keep the aircraft in the airspace.
He said that high cost of foreign exchange, high maintenance cost, high cost of aviation fuel and low traffic are responsible for the bad condition of the airline.
According to him, "Maintenance cost is high, foreign exchange is not available and the high fuel price in addition to the fact that after the high Christmas season, there was low passenger traffic from later January till Easter period. Then we are also contending with overhead, which is so much.
"When you have no traffic and what you are generating cannot defray operating cost, you cannot survive. We are still operating but from the rate we are going we may shut down anytime."
He also explained that because the aircraft in the fleet are old and breakdown very often, the cost of maintenance is high, "and spares have to be imported and even insuring the aircraft requires foreign exchange."
When contacted, the immediate past CEO of the airline, Captain Ado Sanusi, confirmed that it is very unlikely that the airline would survive, except it urgently acquires new fleet.
Sanusi who took over the airline in February 2017, when it was in comatose told THISDAY that the airline was coming back from shutting down when he began to preside over its affairs.
"The airline had two aircraft, which were due for major checks, the C-check, passenger confidence was low and three of the airline's aircraft were in maintenance facilities overseas. The airline was at the brink of collapse when we took it over, "he said.
Sanusi further explained that the airline was under receivership, as it was being managed by the Asset Management Corporation of Nigeria (AMCON), "so what the airline needed was more aircraft, which would enable it to increase revenue."
THISDAY learnt that the AMCOM had invested so much money in the airline but was not ready to invest more, a situation that lead to Sanusi and his team to consider having the C-check conducted in-house.
"The engineers in the airline went to work, they took the Boeing 737 classic and successfully conducted C-check and received Aircraft Maintenance Organisation (AMO) certification from the Nigerian Civil Aviation Authority (NCAA).
"The success of the C-check opened door for us because it restored passenger confidence, knowing that we had the ability to maintain our aircraft and from 40 to 50 per cent load factor, our passenger traffic grew to 80 per cent.
"AMCON was elated that they continued to support us. We sold assets we didn't need and we brought back one of the three aircraft ferried overseas for maintenance and now had two Boeing and One Bombardier Dash 8. Our revenue rose from N180 million to N2 billion. We did a lot.
"We bought the engines of United Nigeria Airlines Boeing B737-300 aircraft. With our revenue, we revamped the rotary wing of the airline and would have clinched a multimillion-dollar deal with Total for shuttle service but because the airline was under receivership we didn't. We even went into a strategic partnership with indigenous company to revive the rotary wing and was in that process when COVID-19 came," Sanusi said.
"The COVID-19 lockdown was the undoing of the airline, like many others in other parts of the world, "Sanusi said, adding, "It was during the lockdown that the Maintenance, Overhaul and Repair (MRO) facility came alive and began to engage in third party maintenance, which is maintenance of other airlines' aircraft."
"Immediately after the lockdown we were ready to go into business. Passenger demand was unprecedented. The prospect of Aero was very good. It had a chance to recover, but the biggest challenge was fleet renewal. Average age of the aircraft was late 20s or early 30s. We communicated to the shareholders.
'We did not have the ability to do D-check, which was heavy check, but we later got approval and we conducted D-check on the Boeing 737 after which we would retire the aircraft, hoping that there would be fleet renewal in order to put the airline as an on-going concern, "Sanusi revealed.
Aero, is described as a fully made airline because it has scheduled operations wing, rotary wing, MRO and training school; no other airline in Nigeria came close.
THISDAY learnt that for the airline to survive some of the workers had to be put on redundancy and at the peak of revival it had about 400 staff, about 100 in schedule wing, 10 in training and the others on administrative and maintenance and whenever it had more jobs on maintenance it recalled more technical staff.
On why the airline was going under, Sanui said, "The airline needs fleet renewal without which it cannot survive. External factors include high cost of aviation fuel, scarcity and high cost of forex, low passenger traffic, which was extraordinarily very low. When I left the airline had a good chance of survival, even coming out of receivership. But it needed strict financial management," he said.
A former top manager of the airline said that the genesis of Nigeria's foremost carrier started because of the way it went into scheduled passenger operation, the kind of aircraft it acquired, the age of the aircraft and "When AMCON took it over it did not inject enough fund into the airline. If sufficient funds were injected and the rotary wing was revived it would have survived; although the oil and gas industry was going down at a time when the price of crude crashed. The airline has good people but it needed finance," he said.-This Day.
Nigeria: CBN Caution Banks On Benin Republic Linked Transactions
The Central Bank of Nigeria (CBN) has cautioned banks over transactions with customers and businesses linked to the Benin Republic to avoid been used as conduit for money laundering and illicit drug deals.
Director Banking and Supervision Department, CBN, Mrs Asuquo Evelyn gave this warning in a circular to all banks, adding that the apex bank had received intelligence reports from competent sources that the Benin Republic is becoming a hub for illicit drug trade in West Africa.
The circular stated: "We write to bring to your attention an intelligence report availed to the Central Bank of Nigeria (CBN) which indicated that the Benin Republic is increasingly becoming a drug trafficking transit and consumption hub in West Africa," the circular reads.
"In order to ensure that Nigerian banks are not used as conduits for laundering such illicit funds, it has become imperative to intensify the now-your-customer (KYC) and customer due diligence (CDD) measures in your bank as required by regulation.
"Consequently, you are required to implement additional measures on customers and business relationships linked to the Benin Republic. You are also required to re-classify related customers and transactions as high risk and conduct enhanced due diligence (ED) procedures accordingly."- Vanguard.
Tanzania: Geita Seeks 10.8bn/ - to Improve Infrastructures in Primary Schools
GEITA District Council is seeking 10.8bn/- as a total budget for improvement of primary schools learning environment, including building classrooms, latrines and desks.
Geita District Council Primary Education Officer, Ms Edith Mpinzile, revealed this last week when made presentation on education sector report during the council meeting.
Ms Mpinzile noted that out of the total budget, about 6bn/- would be spent on building classrooms as the council is facing a shortage of 3,012 classrooms for primary schools.
She added that about 3.5bn/- is also needed for repairing and constructing the pupils' toilets, as primary schools are facing a shortage of 3,056 toilets.
She recommended that about 1.3bn/- is expected to end the shortage of desks.
"This year schools have registered a total of 21,204 who joined nursery schools," she said.
Ms Mpinzile stressed that improvement of infrastructures for primary schools will enable about 257,090 primary pupils to access friendly learning environments, of which 127,033 are boys and 130,057 are girls.
District Council Chairman, Mr Charles Kazungu, said the Council Finance Committee has proposed that some amount of money from the Corporate Social Responsibility (CSR) Fund of the council be spent on addressing challenges in the identified primary schools.
Geita District Council Director, Mr Paul Wanga said urgent efforts were needed to solve the primary education challenges in the council to improve academic performances of primary schools.-Daily News.
Tanzania: Tarura Earmarks 1059.2km of Roads for Reconstruction in Geita
THE Rural and Urban Roads Agency (TARURA) in Geita District has identified about 1059.2 kilometres of roads which require reconstruction and proper maintenance.
TARURA'S Geita District Manager, Engineer Bahati Subeya, made the remarks last week in her report over maintenance of road infrastructures from January to March this year.
Eng Subeya explained that so far TARURA in Geita District serves a total of 1745.79kms of a rural roads network.
The Eng Subeya recommended that, the entire roads network has a total of 513 bridges.
"In the current financial year (2021/22) Tarura Geita District is conducting various road rehabilitations, with 1.9bn/- allocated from the Road Fund for that purpose," TARURA manager said.
Geita District Council Chairman, Mr Charles Kazungu advised TARURA to start reconstructing roads that are at very poor condition.
Geita District Council Director, Mr Paul Wanga, said the council is committed to ensuring that the grievances of essential social services including roads are resolved.-Daily News.
Tanzania: Govt Keeps Hands Off Private School Fees
THE government has pledged not to intervene with fee structures of private schools, instead it will improve teaching and learning environments of public schools to make parents have trust in them.
Education, Science, and Technology Minister Prof Adolf Mkenda made the statement in Dodoma when responding to a question from the 'Daily News' reporter who wanted to know government's efforts for controlling private schools' fees.
In late 2015, the government requested private schools to submit their fee structures for the government to review.
The move came after several complaints from parents across the country claiming that some private schools were charging very high school fees.
Mkenda insisted that the government offers free education to reduce the burden on parents and encourage them to send their children to school.
"We are encouraging the private sector to invest in the education sector, and the government makes efforts to improve and maintain the status of the public schools," Prof Mkenda explained.
Prof Mkenda argued that any intervention or directives over school fees would affect the business and investment done in those schools while the government encourages the role of the private sector in the education sector.
He added that private schools invest heavily on, among others, building expensive structures and human resources, so regulating fees will discourage them and they may subsequently close their businesses.
Prof Mkenda stated that the government will only regulate fees at the tertiary education, especially for the private institutions that admit students who have been sponsored by the High Education Students Loan Board (HESLB).
"The government will not sponsor any student studying in higher learning institutions charging very high fees," he insisted.-Daily News.
Malawi: Airtel Malawi Hits 1, 000 Milestone for Mobile Money Branches
Airtel Malawi - one of the mobile network companies in Malawi - says it has reached a 1, 000 milestone in setting up mobile money branches across the country.
Airtel Money Director Brighton Banda made the revelation during the opening of Bwandilo Airtel Money Branch in Lilongwe on Wednesday.
Banda said Airtel Money has been expanding branch network, agents and kiosks by offering local people a choice to own and run businesses and, in turn, become financially resilient and independent.
"We are excited to share a milestone that is Airtel money branch. These are a walk in mobile service centres that support agent to hand in or cash out money without going to the bank," he said.
Banda said the centres will help individual customers to load money in their mobile phones, withdraw and register their sim card.
Apart from setting up branches, he said, the company has registered a network of over 70, 000 agents of which most of them are first time business holders.
These agents have the opportunity of running the mobile money businesses, he said.
Banda further said his company will continue to empower and transform lives of Malawians.
Banda added, "Airtel Malawi is committed to further improve services to reach even more people and empower them."
Bwandilo Airtel Money Branch Manager Susan Tsonga said the branch will assist many customers.
"This is a strategic place for people to transact through Airtel money services," she said.
Tsonga said people will be able to transfer their money and easily do their businesses.-Nyasa Times.
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INVESTORS DIARY 2022
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