A Kenyan parliamentary committee on Tuesday recommended nationalising Kenya Airways as part of an effort to turn around the loss-making airline, Reuters reported. The transport, public works and housing committee also proposed setting up of an aviation holding company with four subsidiaries, one of which would run Kenya Airways, which is 48.9% owned by the state and 7.8% by Air France-KLM. Under the proposals, which still need to be debated and voted on by parliament, another arm of the holding company would operate Nairobi’s main international airport.
Kenya will more than double its capital gains tax rate to 12.5% from 5% to bring it in line with international standards, Finance Minister Henry Rotich said in budget proposals to parliament on Thursday, Reuters reported. Analysts said the move showed the government had opted to squeeze already hard-pressed taxpayers, rather than cut expenditure, to make ends meet. “They are basically trying to get more and more out of a small tax base,” said Kenneth Minjire, head of securities at Nairobi-based Genghis Capital.
Kenya Airways plans to double its fleet over the next five years, its chairman said on Monday, as the loss-making carrier combats regional rivals like Ethiopian. The Kenyan airline, which is 48.9% government-owned and 7.8% by Air France-KLM, restructured $2 billion of debt in 2017 and is opening new routes as it seeks to return to profit, Reuters reported. It had a fleet of 41 airplanes at the end of last year, comprising a mix of wide and narrow body Boeing planes, compared with Ethiopian which operates more than 100 planes.
Kenya’s headroom for new borrowing has shrunk since it tapped the Eurobond market this month and it is time for the country to begin reorganising its debt, central bank governor Patrick Njoroge said on Tuesday, Reuters reported. Njoroge, whose term is due to end next month, told reporters that the $2.1 billion Eurobond issuance in mid-May allowed Kenya to refinance some of its existing loans and “hopefully (give) us more room to expand the economy” and increase export capacity.
The assets of Kenya’s ARM Cement have been sold to the National Cement Company for $50 million, its administrator said on Tuesday, Reuters reported. ARM Cement was put under administration last August by some of its creditors over a $190 million debt and its shares were suspended from the Nairobi bourse. It has debts with a range of creditors, including local commercial banks. The transaction, which applies to ARM Cement’s Kenyan assets only, is subject to regulatory approvals, the statement from the administrator said.
Kenya has room to refinance its debt by extending the tenure of some of its loans, the central bank governor said on Tuesday, but it faces growing risks from an unsteady global economy, Reuters reported. Slowdowns in Europe and China, uncertainty over Brexit, a U.S.-China trade war and the recent U.S. government shutdown have all contributed to fears of a crisis in the global economy, Patrick Njoroge told a news conference. “Clearly, the global economy is without a rudder,” Njoroge said. “It’s just coasting and without direction.
Kenya is in talks with lenders to roll over a $760 mln syndicated loan this fiscal year and lengthen its maturity in order to make debt repayments more manageable, a senior Treasury official said on Tuesday. The loan, which was initially for two years, was arranged by TDB bank, said Kamau Thugge, the principal secretary at the ministry of finance, Reuters reported. The government aimed to increase the tenor of the loan to seven or 10 years, he said, adding that they had not yet struck an agreement with lenders whom he did not identify.
Oman’s Raysut Cement said on Tuesday it plans to acquire Kenya’s ARM Cement, which went into administration in August, as part of its expansion plans. Raysut has expressed its interest to the administrators to acquire the company, it said in a statement. “The acquisition will complement Raysut’s revised strategy to manufacture clinker in proximity to the markets it supplies to in East Africa,” Raysut said in the statement, adding that the acquisition was estimated to be worth more than $100 million, Reuters reported.
Creditors of Kenya’s ARM Cement, once the country’s second-largest cement maker but which has been in administration since August, approved on Tuesday the sale of a subsidiary or assets to reduce its debt of $190 million, Reuters reported. The creditors did not identify which subsidiary or assets would be sold, or the possible value of a sale, under Tuesday’s rescue plan, during which the company will remain operational. George Weru, one of the co-administrators from PricewaterhouseCoopers (PwC), told Reuters they had 12 months to rescue the company.
The administrator of Kenya’s debt-laden ARM Cement will ask its creditors for support to keep the company running by selling some of ARM’s assets to cut debt, as well as a plan to engage with financiers for working capital, Reuters reported. George Weru, a co-administrator for the cement firm, told Reuters the proposals will be put to the company’s creditors on Tuesday when they meet to chart the best way forward. The company was put into administration in August by some of its creditors and its shares suspended from the Nairobi bourse.