Wednesday, 30 April 2014

Al-shabaab is effectively defeated

No longer an effective fighting force
EMERGING INTELLIGENCE  suggests that Al-shabaab,the Islamist militant outfit in Somalia, has been effectively defeated. Its top command has been killed and its financial sources have been chocked. The heightened security operations in Kenya are said to be mop up operations  to weed out its operatives and sympathisers in Kenya

Since last October, Kenyan defense Forces have virtually obliterated that outfit. A number of air and commando raids by Kenya Defense forces have reduced the outfit to a shell. A large proportion of its commanders are dead and so is a large proportion of its recruits who were killed in an air raid at a camp in hurguur last October.

Others have left the unit. The few that remain are however lethal and are believed to be the reason for the heightened security operations on suspected Al-shabaab hideouts in Kenya

This raid, the first one by Kenya Air force is said to have killed 400 people including trainees, commanders and officers. Read
In March this year, the Air force s raided a meeting of Al-shabaab top brass at a camp in Birta Dheere area of Somalia. The overall leader Muktar Abdirahman Godane (Muktar Robow), escaped this attack by a whisker.

However, another 37 commanders were killed. They include Ali Rage also known as Ali Dheere.  Dheere was the Al-Shabaab Spokesman, chief of Propaganda and a key player in the command chain of the militants. This raid was the single major blow to the outfit command structure.

Other commanders who died in this raid included a Kenyan known only as Gamadhere; two Arabs- Zakur Bin Khalid, Abdi Malik and Ubeyda. There were also two British Born commanders and others from different nationalities were also killed including Abdirahman Halane, a Somali national who coordinated the militant activities in Birta Dheere. In effect by the end of March more than 500 militants including their top commanders were dead. Militarily the force was no more.

Apart from the loss of personnel, Al-shabaab’s sources of finance have dried up. The outfit raised its finances from destructive economic activities including smuggling, destruction of flora and fauna and extortion.

Al-shabaab, exported some US$500,000 worth of Charcoal to Saudi Arabia every month, said a military source. It made an additional US$0.25 million a month from taxing the Kismayou Port, added the source.

 Another sources in wildlife protection told this publication that Al-shabaab also benefited from conflict ivory. This is to say that it was actively exporting Ivory from conflict zones in as D R Congo, South Sudan, and Central Africa Republic. It also used its network of supporters to poach elephants and Rhino in Kenya and Tanzania.

Kenya was largely a transit hub of Ivory from these conflict areas which was bussed disguised as passenger personal effects. The cargo would then be sold to agents in Nairobi at US$50 a kilo. The cargo would then Transported to Liboi and onto to Kismayou Port. Here Al-Shabaab bought it at US$200 a kilo, said a wildlife protection source. The world Market price is in excess of US$1500 a kilo. Al- shabaab, being just another broker would sale for US$400-500 a kilo.
In its heyday, the outfit was exporting one to the tons of Ivory a month earning between US$0.4 million and $1.2 million a month at the minimum. However, the outfit is suspected to be involved in the on-going poaching of elephants and Rhinos in kenya more for revenge that for commercial gain.
The entry of Kenya Defense Forces into Somalia in October 2011 drained all these resources, with a majority drying completely from August 2012 when KDF overran Kismayou Port. The capture of this Port was a major blow to Al-Shabaab’s economy:  It immediately chocked off a US$2 million a month business that is exports of charcoal and Ivory and smuggling of contraband goods and port use tax. The presence of KDF also scared off other potential sources. For instance, money transfers were now difficult since Al-shabaab did not control the city. It also choked the supply route for small arms.
The dry financial taps, coupled with the menacing presence of the regions Military superpower, placed Al-shabaab at a disadvantage for it could no longer pay those guys who had joined for the money. In its heyday, al shabaab could pay its fighters US$300 a month plus other benefits. With the taps turned off-recruiting the youth became difficult. Many even walked away from it. Nor could it afford to buy weapons for the militants. It is a spend force!

However, it still has some ordinance in the hands of former sleeper cells in Kenya. Hence Al-shabaab, fighting for its survival and its pride, is a lethal force. It can still devastate some location with its limited ordinance.

Monday, 14 April 2014

End of the road for Al-Shabaab Economics is nigh

These Goons are used to perpetuate
BY THE LOOK OF THINGS, Shabanomics, or should we say Economics of terrorism, is crumbling. And it will leave behind a string of Orphans. 

Shabanomics or Economics of terrorism is a conglomeration of illegal economic activities including:smuggling of contraband goods, piracy; tax evasion and tax avoidance; extortion;recruitment and training of suicide Bombers; recruitment of Scouts; poaching; bribery and kidnappings for ransom. 

These activities thrive in failed states.
Consequently, such criminal elements fight tooth and nail to sustain failed states in such a condition for once circumstances change; the criminals find no hiding place.

This is the prospect facing Al-shabaab, the al-Qaeda affiliated terrorist gang and its “children” in East Africa. It was born and bred in Somalia during the years of lawlessness in that country. In its heyday, the Red sea and India Ocean were dangerous place for shippers due to piracy. Many Somali Pirates were killed or arrested and ransom running into billions of US dollars was paid. Nairobi’s Wilson Airport was the exit point for ransom Money.

There is no evidence linking Al-Shabaab direct with piracy. But there is evidence that it received some 20 per cent protection Money from the Pirates. Therefore, although Al-Shabaab may not have had Pirates of its own, it encouraged many to be come pirates and hide hijacked ships in the Ports it controlled in for a fee.

Al-Shabaab had also taken control of the Kismayou Port in Somalia through which it smuggled contraband, including small arms, into Kenya through Eastleigh estate in Nairobi, Kenya. It earned an estimated US$250,000 every month from import tax levied on the use of Kismayou port. It also made a fortune from exporting charcoal through the port.

Al Shabaab is also suspected to be involved in poaching of Kenyan elephants and Rhino in a bid to finance its operations. Investigators have established direct links between Somalis and the increased poaching in Kenya. Somalis leaving in Kenya are the brokers and, it is suspected, they also have links with Al-Shabaab since the Ivory is exported through Al-Shabaab controlled Ports in Somalia. The consignments are also escorted to the Ports by Al-shabaab militants in their “technicals.”-SUVs converted into warfare vehicles. On this trade alone

The entry of KDF spoiled the party
However, fortunes have been turning against Al-Shabaab and its supporters and financiers. So when Some Politicians accused the Kenya government of trying to “destroy the Somali economy in Kenya,” they were right. The economics of disorder is clearly coming to close- and many businesses will go under, leaving plenty of paupers (or are they orphans?) in its wake.

But I am surprised that the politicians found their mouth last week. It is too late in the day. The destruction of the Somali type of economics began has been three years in implementation.

In October 2011, the Kenyan Military invaded Somalia to root out, Al Shabaab. Among the Military strategies was the chocking off of Al-Shabaab’s economic lifeline. Kismayou port was blockaded by the Kenya Navy while the Army chocked the land route to Nairobi. Read

The entry of the Kenyan Defense Forces also spawned the end of piracy. The land and sea blockade weakened Al-shabaab’s financial base and therefore its capability as a fighting force.

Although it’s international economics was crippled. The domestic side was still vibrant but was largely at stake. The domestic side included the sale of old stocks of contraband goods and sale of real estate bought with piracy money. Now both appear to be dwindling too and soon they could dry up.

Last year, Al-shabaab raided the Westgate Mall in Nairobi and killed 62 people. That was a mistake they probably now regret. Among the dead were the relatives of the new President Uhuru Kenyatta. Rather than being cowed down, the new government intensified its war on Al-Shabaab.

Kenya Air force jets began to strike Al-Shabaab bases deep in South Somalia. In series of attacks in the last week of October last year, two senior commanders were killed in a drone attack in Baraawe in South Somalia. Among the dead was a commander named Anta, a Bomb expert. Kenya Defense forces also assaulted an al-shabaab camp in “Jillip deep in South Somalia.”

Fleeing from KDF in Kismayou
Even before the dust had settled down, Kenya Air Force assaulted a training camp in Hurguun killing an estimated four hundred people, including trainees, Officers and commanders. The attacks continued to the end of November last year completely wrecking the Al-Shabaab’s high command.

This destruction has caused panic among the ranks as some non-Somali commanders are said to have fled to Yemen. Al Shabaab responded by increasing insecurity in Kenya-bombing one place after another in Kenya which sparked off the on-going crackdown on Somalis in particular and illegal aliens in general.

This backlash was not entirely unexpected. Last year this writer warned in an article elsewhere that it was imminent. Read

The on-going lock down of Eastleigh, euphemistically called the little Mogadishu, portends worse danger than just identifying and repatriating undocumented Somalis back home. It also includes identifying and arresting potential terrorists and with about 20 bank accounts being investigated for financing Al-shabaab, the death knell for their economy is just about to be sounded. It is the final stroke that broke the Carmel’s back.

That is why the noise is very loud for it could also expose politicians who are beneficiaries of al-shabaab largesse since some wealthy Somalis and Arabs are to finance Al-Shabaab. Their money could also have funded the campaigns of some politicians in Kenya.

In 2011 when the first bombs hit Nairobi, Somalis found themselves despised by other Kenyans. It took the government intervention to save them from outright discrimination. Should it be established that some of the business from where Kenyans buy cheap merchandise also finance al-shabaab, then; the end for such businesses will have come. Nairobi is apparently the last stop before Al-shabaab‘s demise.

Wednesday, 9 April 2014

Africa still the rising continent

 AFRICA IS STILL POSTING ROBUST ECONOMIC GROWTH. However, the South Africa economy is the drag on an otherwise robust economic growth narrative in Sub Saharan Africa, says the Bretton Woods institutions. In two separate reports released over the last two days, the World Bank and IMF agree that South Africa’s economic growth is cirrhotic and a drag on SSA growth record.

Sub-Saharan Africa, including South Africa grew by 4.7 per cent last year. “Excluding South Africa, average output growth for the rest of the region was 6.1%, second only to developing Southeast Asia and Pacific at 7.2% and well above the global GDP growth rate at 2.4%.South Africa grew by only 1.9% in 2013 says%.” Africa’s Pulse.    

The IMF has lowered its growth outlook for the South African economy in 2014 to 2.3%, down from a previous forecast of 2.8%. Similarly, the 2015 outlook was lowered to 2.7% from over 3.0%.
The Bretton woods institutions blame “tense industrial relations in the mining sector, tight electricity supply, anemic private investment, and weak consumer and investor confidence for South Africa’s woes.”
 South Africa has slipped from the top perch as Africa’s largest economy, giving way to Nigeria. Nigeria’s rebased GDP stands at US550 billion. The IMF noted that Nigerian growth had remained strong, owing to relatively high oil prices and despite security problems in the north and large-scale oil theft in the first half of 2013.

It also indicated that, while South Africa’s growth should rise moderately, driven by improvements in external demand, the risks were to the downside.
The country was particularly exposed to a reversal of portfolio flows should global financial conditions tighten further.

For its Part Africa’s Pulse Published by the World Bank shows economic growth rising from 4.7% in 2013 to 5.2% in 2014. It will rise to 5.5 Per cent in 2015, says the Pulse.The growth is broad based driven by strong public and private investment demand and robust household consumption.  Other drivers are: the rise in commodity prices and the surge of foreign capital.

Sub-Saharan Africa has registered a sustained robust economic growth for close to two decades. The continent even shrugged off five years of prolonged weakness in the global economy, and continued to register relatively vigorous growth.

While the number commodities exported has not changed significantly, she has made substantial progress in diversifying their trading partners, says. “Over the last decade, exports to emerging markets such as the BRICs—Brazil, Russia, India, China—have grown robustly, primarily due to the prolonged boom in commodities demand. The BRICs received only 9%of Sub-Saharan Africa’s exports in 2000 but accounted for 34% of total exports a decade later,” it adds.

Across the region there has been a rapid growth in foreign direct investment (FDI). Two investment trends are central to driving this expansion—the extended commodities boom brought about by the unprecedented scale of development in Asia, and the massive expansion of moving international trade activities offshore. The new wave of FDI not only delivers investment and employment but also opens up new opportunities through deeper global trade integration.

Although the region continues to grow faster than many economies around the world, growth in Africa is not inclusive when viewed in terms of the population demographic. Resource-rich countries are growing much faster at 7% (median rate) than the non-resource rich countries at 1.6%. Although fragile and conflict countries are also seeing growth, the rate is much lower than countries who have not suffered any conflict.

Sub-Saharan Africa’s exports grew at a robust pace, driven by the region’s natural resources. During 1995-2012, the region’s total exports increased from $68 billion to over $400 billion. Most of this increase came from natural resources export. For example, petroleum, minerals, and metal exports ballooned from $38 billion to $300 billion during this period.

While high commodity prices have helped the region in recent years, the heavy reliance on resource-based exports also makes the region highly vulnerable to the shocks in commodity prices.

Export diversification has been limited, mirroring sectoral shifts in the region’s economies, but there has been substantial progress in diversifying trading partners. Strong growth in countries in the region have characteristics that are associated to the structure of production, advances in structural reforms, the influence of the country to the world economy, or sound macroeconomic frameworks.

The challenge for many African countries, particularly oil exporters, is to diversify their exports. Oil-exporting countries rely heavily on a single commodity as their revenue source. For example, Angola, Chad, Equatorial Guinea, Gabon and Nigeria received, on average, more than 92% of their export earnings from oil during 2010-13.

Although, the export revenue share from minerals and metals may not be as high as that from oil, it is still high for some nonoil resource-rich countries—Botswana, Guinea, Mauritania, and Sierra Leone—with earnings more than 50%of their revenue from natural resources.

Some countries have successfuly diversified exports. An example is Tanzania. The country saw major increases in and diversification of output and exports. The production and export of traditional agricultural cash crops (such as cashew nuts, coffee, cotton, tea, sisal, and tobacco) declined considerably in importance. The geographic distribution of Tanzania’s exports also changed considerably over the last decade. Exports to the EU fell, while regional trade, especially with the East African Community (EAC) and South Africa, increased.

There are broad areas in which Sub-Saharan Africa governments need to invest to ensure that growth continues and is shared among entire populations. The report suggests that good governance and institutions; investing in the people of Africa—especially the youth; promoting infrastructure across the region; reducing barriers to trade and investment; and making sure there are adequate services and infrastructure for the rapidly expanding urbanization of African cities and secondary cities are key to maintaining and sharing growth within the region.

Globalization of services is a potential important source of growth for the Africa region. Several favorable trends that support this view include: services trade is the fastest-growing sector within global trade; the share of modern services is rising; and the share of developing countries in world service exports has been rising. Technology and outsourcing are enabling traditional services to overcome their old constraints such as physical and geographic proximity. Modern services, such as software development, call centers, and outsourced business processes, can be traded like value-added, manufactured products, enabling developing countries that focus on such services, innovation, and technology to leapfrog from agriculture into manufacturing.

The question that the region faces is, “Has Sub-Saharan Africa tapped this potential?” The region’s service sector which totals $50 billion, trails all other developing regions; however, it is expanding annually at about 12%, on average. Traditional services such as retail trade, hotels, restaurants, and public administration have recorded a decline from 73% of total services in 2005 to less than 64%in 2012, while modern services in the region have increased by over 10 percentage points from just over 26%of total services to about 36% over the same period.

In some countries such as Mauritius, Rwanda, and Tanzania, modern services recorded compound annual growth rates of over 10%between 2005 and 2012, with Rwanda starting from a low base of less than $40 million in services exported in 2005 to over twice that amount at almost $85 million by 2012. In both Mauritius and Rwanda, rapid expansion in modern services is a result of increased activity in tradable business and financial services. 

Over 60% of those employed in large companies in Mauritius work in the service sector, which offers more employment opportunities than either agriculture or manufacturing. While these countries have experienced the fastest increase in modern services, countries like Kenya are also emerging as countries where modern services are becoming drivers of growth and development.

Tuesday, 1 April 2014

Kenya Airways set to Rock east Africa's transport industry

The pride of Africa:The mother airline
KENYA AIRWAYS IS SET TO ROCK THE transport industry in east Africa, and perhaps Africa. By the time you read this piece, Kenya Airways will be three -airlines in -one while its fleet will have grown by one. Jambojet, Kenya airways’ low budget subsidiary will launch on April 1st. The other airline, Precision Air, is based in Tanzania.

On April 4th the airline will probably have received the first of six Boeing787 Dream liners to be delivered within the next 12 months.  In effect, the airline’s fleet will grow to 51 brand new aircraft by May 2015. It will also have grown to three airlines in one.

These developments should sound a warning signal to all players in the transport sector that things have changed.  It is not business as usual for KQ  will give them a run for their money.

Jambojet, the no frills subsidiary will initially fly between Mombasa-Nairobi-Eldoret and Kisumu where it expects to ship some 0.6 million Kenyans this year.  This is 27 per cent of the 2.2 million passengers who travel this route by road per year.  In the next two years, jambojet expects to fly 2 million passengers within east Africa, a huge chunk of these will be on Kenyan routes.
Precision air

Bus companies on these routes are therefore put on notice. It is no longer business as usual. The road transport sector has every reason to be wary of Kenya’ Airways designs for they cannot compete.

The airline’s air ticket is just Kshs 800 more than what some luxury buses charge for seven hour journey between Nairobi and Mombasa.  The trip by air takes 45 minutes putting long haul bus companies on an unequal keel.

  Jambojet will operate B737 aircraft which also boast 30.2M3 of cargo space.  That puts long haul freight firms on notice that it is no longer business as usual. They now have competition from the air.

 The entry of the Long haul B787 Dream liners and their close relatives B777-300 means that Kenya Airways will fly long haul to such places as China, South Korea, Australia and even the US. It has a cargo hold of 202M3 meaning it can airfreight more cargo, especially the perishable Horticultural produce. Kenya is exploring new markets for cut flowers in China and the east. With such large aircraft, such business is now feasible.

Kenya Airways is one of the two African airlines that are growing. At the current rate of expansion KQ will dominate the Africa airspace in less than 10 years. The only other strong airline in Sub Saharan Africa is Ethiopian Airlines. Therefore the contest for the dominance of the African airspace is between KQ and ET. It is upgrading its long haul capacity to supplement its short haul capacity. It short haul capacity includes 12 Brazilian made  Embraers .The aircraft is said to be suitable for short haul routes especially in Africa. Kenya Airways is gunning for domination of the African Market which is the airline’s lifeline.
Jambojet:The new kid on the block

The B787 dream liner is the first in a fleet of nine whose orders have been firmed. Six of these, plus a B777-300 are to be delivered between April, 2014 and May next year. There will still be three more to deliver. In its 10 current year- development plan to 2021, the airline plans to raise its fleet to 119 aircraft and expand its destinations to 110 from the current 50.

Kenya Airways is the only successful privatised airline in Africa- and perhaps in the world. It is the youngest airline in Africa being only 36 years old but it is a major player in African aviation industry. It is owned 26 per cent by Air-France-KLM, 22 per cent by the Kenya Government and the rest by private investors. It competes for domination of the African skies with Ethiopian Airlines (ET) and South African Airways, SAA. Both SAA and ET are the oldest airlines in Africa. In fact SAA is among the oldest airlines in the world.

Apart from hardware advantages, physical location could also play a major role on determining who has the largest pie. Kenya Airways’ home base is Jomo Kenyatta international Airport in Nairobi.  Nairobi is a natural hub of the continent being located, as it were, in the middle of the continent.  Its location makes connections to and from other destinations in Africa convenient. It also makes connections from Africa to the rest of the world seamless. That location could be KQ’s selling point.

The Airport itself is undergoing massive expansion which includes the construction of a green field terminal that will raise its capacity to 20 million passengers. The Greenfield terminal to be developed in two phases will expand JKIA’s capacity by 12 million passengers to more than 20 million passengers a year in Phase I. It will have a parking capacity, including “remote parking” for 60 aircraft bringing the total number of available parking slots over hundred aircraft. 

This could give a larger Kenya Airways advantage over the competition.  The future for African Airspace is headed for interesting times. Will Kenya Airways dominate? Let’s keep watching this space. But the aviation industry in Africa will never be the same again.