Monday 23 March 2020

African airlines lose $4.4 billion in revenue following the spread of coronavirus on the continent

Covid is spreading across the African continent

Lagos, Nigeria (CNN)Multiple flights have been cancelled or temporarily suspended across Africa as airlines struggle to cope with falling demand following the spread of coronavirus.

Rwanda Air and Air Mauritius are among airlines that have suspended flights to China. Morocco has suspended all international flights to and from its territory "until further notice" and Kenya Airways also suspended flights to countries affected by the virus.

According to a report from the International Air Transport Association (IATA), as of March 11, African airlines have recorded a loss of up to $4.4 billion in revenue since the virus surfaced.

Adefunke Adeyemi, IATA's Regional Director for Advocacy and Strategic relations in Africa says passenger demand for Africa has reduced significantly. International bookings in Africa went down by 20% in March and April, while domestic bookings have fallen by about 15% in March and 25% in April, according to data from IATA.

"Not as many passengers are travelling to, from and within Africa because of the outbreak. In terms of the impact on the aviation industry, the numbers we released show Africa taking a hit in terms of revenue," Adeyemi told CNN.

Disruptions from the virus can result in a 6 million passenger loss for airlines in South Africa flying out of the country according to recent data from IATA.

On Wednesday, the country's national carrier, South Africa Airways (SAA) announced that it had already cancelled up to 162 international and regional flights until the end of March due to restrictions and low demand following the spread of coronavirus.

SAA is under a form of bankruptcy protection and currently battling for its survival.

As of March 18, Kenya had three confirmed cases of coronavirus but IATA predicts that if the virus gains a spread of more than 10 in the country, it is likely to face a loss of 622,000 in passenger volumes.

Kenya has already introduced travel bans to curtail the possibility of the virus spreading further, suspending travel from any country with reported coronavirus cases.

Nigeria and Rwanda are also faced with a loss of 853,000 and 79,000 in passenger volume respectively, according to IATA.

One of the reasons Africa's aviation industry is hit hard by the spread of the virus is its large trade and travel relations with China, where the outbreak started, says Tokunbo Afikuyomi, an economic analyst based in Nigeria.

According to a report by QZ Africa, Air flight between China and Africa has increased by 630% in the last decade, with airlines like Ethiopia air flying in about 1,500 passengers from China every day.

Over the past 20 years, China and Africa have become close trade partners with China expanding its economic and political ties on the continent.

As a result, Chinese citizens have flocked Africa, working in industries including manufacturing, healthcare, and technology. And according to Migration Policy, there are currently about 2 million Chinese in Africa. 
"China is Africa's main foreign business partner. A range of businesses and people come to Africa from China and we have many flights to the continent every day," Afikuyomi said.

"The suspension of some of these flights will definitely affect the revenue of airlines as we are already seeing with some international airlines."

Outside Africa, airlines like German-owned Lufthansa have already cut their operations by half due to drastic declines in bookings following the outbreak of coronavirus.

The UK based airline Flybe also collapsed March 5 as a decrease in flight demand because of the virus dealt a final blow to the already struggling carrier.

Afikuyomi says the likelihood of this happening to African airlines, especially airlines like South Africa Airways already facing bankruptcy challenges to stay afloat is high. 

"They (Flybe) went out of business because they had issues before coronavirus, the pandemic came in and made things significantly worse. Similarly, in Africa, we have a few airlines who already had past issues.South African Airways went through bankruptcy in December. The virus situation is going to put a strain on all African Airlines, particularly the ones with past struggles," he said.

Despite the spread of coronavirus across the continent, the World Health Organization (WHO) recommends that flights should not be hindered.

The International Health Regulations (IHR) stipulate that during health emergencies such as coronavirus, countries are not expected to stifle businesses and the economy by cancelling or suspending flights.IHR is an international legal instrument backed by the WHO, it provides a framework to protect people from health emergencies of any type across the world.

According to Mary Stephens, the WHO technical officer for Africa, under the IHR, countries affected by coronavirus are expected to thoroughly vet high-risk travellers or persons with symptoms as opposed to cancelling flights.

"Part of the temporary recommendation is upholding the international health regulations without interfering with the trade and travel of people," she told CNN. "We have the capacity to avoid the spread of the disease (coronavirus) across our borders,"

Citing the 2014 Ebola outbreak, Stephens says the impact of shutting down flights in and out of Africa can crash the travel sector and eventually cripple the economy.

During the Ebola outbreak which killed more than 11,000 people in West Africa, borders were shut down to curtail the spread, a move that resulted in the dampening of investor confidence, crippling businesses and reducing the GDP of countries like Liberia and Sierra Leone.

"Countries should enhance their surveillance systems at the airport so that those at the risk of contracting coronavirus are easily spotted, picked and isolated. But if we cancel flights, how will people have access to response? How will the economy not crash?" Stephens said.

Meantime, airports and airlines within the continent are taking measures to prevent the spread of coronavirus. In the Benin Republic, passengers who have been in countries largely affected by the virus are subject to self-quarantine for 14 days.

Similarly, in Nigeria, travellers from countries with more than 1000 reported cases of coronavirus are barred from entering the country.

It is difficult to predict how long it will take to fully reduce the extent of the spread coronavirus, says Adeyemi.

"We don't know how long it will take to curtail the spread of coronavirus. Previous crisis of similar nature in the past like Sars had a horizon of about 6 months but covid is unprecedented and it is impossible to say how long it will last," she said.

In order to minimize the impact of the virus on the aviation industry, IATA's calls to action to governments of affected countries are to support airlines through loans and tax relief packages says Adeyemi.

In a statement released Thursday, IATA asked governments in Africa and the Middle East to consider providing emergency support to airlines fighting to survive as a result of the spread of coronavirus.

"Stopping the spread of COVID-19 is the top priority of governments. But they must be aware that the public health emergency has now become a catastrophe for economies and for aviation. The scale of the current industry crisis is much worse and far more widespread than 9.11, SARS or the 2008 Global Financial Crisis. Airlines are fighting for survival.

Many routes have been suspended in Africa and the Middle East and airlines have seen demand fall by as much as 60% on remaining ones. Millions of jobs are at stake. Airlines need urgent government action if they are to emerge from this in a fit state to help the world recover, once COVID-19 is beaten," said Alexandre de Juniac, IATA's Director General in the statement.

"From the government, our call to action is for the government to provide relief either through stimulus packages or through suspension of aeronautical charges, alleviation or reduction of some taxes. It is really important now because we can see the importance of connectivity," Adeyemi said. [CNN Africa Website]

      Tuesday 17 March 2020

      Is there a mealie-meal shortage in Zambia?

      A critical shortage of mealie-meal has been reported in some parts of Ndola, Luanshya and Chingola towns. This is is according to a story published on The Mast Online
      The Copperbelt biggest supplier of mealie-meal is Antelope Milling, which is based in Luanshya.
      And Antelope Milling senior director Jimmy Kaldis explained that the biggest challenge was load-shedding which has affected their production.
      “Everywhere there are queues and I am the cheapest in the market. I am selling at K135 to K137 per 25kg bag of breakfast. I want to supplement government efforts. Other millers are getting maize from FRA but they are not selling at the government recommended prices. But I am faced with a challenge of load-shedding of 6 hours. I know the crisis in the country of deficit of power due to climate change and I sympathise with the government. So please I am appealing to you for the sake of these people that are queuing up all over places, please, to reduce on load-shedding so that l can produce more,” Kaldis pleaded.

      “I need two things, help in cutting down load-shedding. Secondly, I need a lot of maize to stop these long queues. I’m happy that you have come. We need to improve the supply for our people. Mealie-meal is a priority to Zambians and I am very optimistic that this farming season we will record bumper harvest. We eat mealie-meal and that no one can do away with it. If you need to see these queues finish, just give us power. I need more maize.”

      Kaldis said this when Luanshya mayor Nathan Chanda visited the plant to check on why there was a shortage of the commodity.
      Chanda said the artificial shortage of Roan Antelope mealie-meal in some parts of the Copperbelt and Luanshya was being addressed.
      Chanda assured Kaldis that something would happen concerning the challenges of load-shedding because President Edgar Lungu and his PF government would not want to see people queuing for mealie-meal.
      “We need to solve issues; one at a time. I’m told Zesco used to give you six hours of load-shedding. Me coming here, l would also like to have a meeting with Zesco and they are very understanding. The problem is that there is no direct and dedicated line. I will engage the Minister of Energy and Minister of Agriculture over these matters,” said Chanda.

      Tuesday 10 March 2020

      Mulling Over Art: Tayali goes for K27,000 at auction

      AFTER an animated bidding war between Chilambwe Lwao and Justine Chola, two well-known Zambian art collectors, a painting by Lusaka-based artist Geoffrey Phiri sold to the highest bidder, Chola for a handsome K18,000 (eighteen thousand kwacha).
      But taking the top spot in the art auction at Tace Zambia Ltd (The Auction Centre) on Kafue Road in Lusaka on Saturday, February 29, was an abstract painting by Zambian modern master Henry Tayali (1943-1987) that went under the hammer for an arguably acceptable K27,000. This painting also went to Chola.
      Tayali is not only considered the most famous Zambian artist outside Zambia, the Henry Tayali Visual Art Centre and the Henry Tayali Award for Best Two-Dimensional Visual Artist presented during the National Arts Council of Zambia’s Ngoma Awards are named after him.
      Advertised and presented as “Artworks and Sculptures Auction Sale duly instructed by Bank of Zambia – Liquidation Auction Sale on behalf of Access Financial Services in liquidation”, the public sale featured 26 sculptures, and close to 60 paintings, drawings and photographs by Zambian artists.
      In what can be described as a theatrical movie, another Lusaka-based artist, Mwamba Mulangala successfully bid K10,600 for his own painting, a work that he created during his formative years. According to the artist he aimed at rescuing the painting “from expedience of standards lower than desirable – especially that I value and know the worth of my work”. Mulangala, like a few others present at the auction, felt most of the artworks were undervalued.
      Other notable works in terms of fetching were an abstract painting by Vincentio Phiri at K12,000, a William Miko sold for K5,000, a Lutanda Mwamba for K6,000 and two Enock Ilunga’s for K6,000 and K4,000 respectively.
      The auction also featured works by Mulenga Chafilwa, Patrick Mumba, Victor Makashi, Dominic Mwamba Yombwe, D. Holthuyesein, Laurey Nevers and Cynthia Zukas of which prices ranged between K1,000 and K2,000.
      In terms of numbers, the late Peter Maibwe’s work featured prominently with close to 20 works of which one might agree were grossly undervalued for an artist of his prominence in Zambian art historical terms. Similarly, sculptures by two of Zambia’s foremost sculptors, David Chirwa and the late Friday Tembo were equally undervalued, some going for as little as K500. However, most of the stone and wood sculptures also appeared to be in bad shape, a few were broken while most were scratched.
      While auction houses pride themselves for selling things on an “as is basis”, meaning take it or leave it, specialised art auctioneers in the global art world are known to restore works close to their original condition. This was not the case at Tace Zambia Ltd. Likewise, the world’s leading auction houses such as Christie’s, Sotheby’s or Strauss & Co (South Africa) own or work hand in hand with galleries and publish detailed catalogues complete with short essays, artists’ biographies and descriptions of the work. These catalogues, which of course include lot numbers for the bidding process are distributed to a mailing list of collectors and also circulated on websites long before a pre-auction exhibition of the artworks is held. The pre-auction exhibitions that are open to the general public (just like the auctions) usually last for up to a week, this allows the bidders to engage with the work before they make the decision to bid for it. Finally, on the auction date, bidders would have come to the event well informed on what is available, such as the provenance of the artwork as well as the estimated asking prices.
      While all this may have not happened so accordingly at Tace Zambia Ltd, it would be unfair to fault the auction house that was handling art for the very first time. The Auction Centre, as it is called, usually handles the sale of household goods, industrial items, motor vehicles and real estate, so surely this was a learning curve. If anything, operations executive Richard Chefu and his dedicated team did a brilliant job in executing their auctioneering duties with much enthusiasm to an equally enthusiastic audience of artists, art lovers and collectors that included eager beginners and more seasoned collectors such as representatives from the Lechwe Trust Gallery who also bagged a few of the works on sale.
      The auction can perhaps be used as a litmus to test out the possibilities and downsides of selling art through an auctioneer’s lens in Zambia. It also invites us to look afresh at the viability of art auctions on the Zambian art scene and probe whether auction houses can help do something that art galleries as go-betweens seem to be struggling to do. This is not to endorse the commodification of art per se, but in an art context that does not really have adequate support structures for the production, display, distribution and sale of artworks. Auctions sound like a good alternative. After all, artists need money in their pockets. - [THE MAST ONLINE]

      Wednesday 4 March 2020

      Zambian Kwacha Reaches Parity With Rand After Steep Drop: Chart

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      For close to three decades, Zambia’s currency would buy you more U.S. dollars than South Africa’s rand. The kwacha’s steep decline in the past five years has changed that: it’s been trading on par with the rand since the end of last year. That’s driving up costs in a country that buys almost a third of its imports from South Africa, which, in turn, pays dollars for most of the goods it purchases abroad. - Bloomberg

      Zambian kwacha's relentless decline has caught up with South Africa's rand