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Prof. Balunywa: Here’s Why Kenya Airways is Losing Out and Lessons For Uganda

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By Prof. Balunywa

Air travel business is global business. It has no space for small operators who have neither a niche nor competitive advantage. It is this that I have been arguing against the revival of Uganda airlines and an inefficient Uganda airlines will simply be a burden to the Ugandan tax payer. As they say, the taste of the pudding is in the eating, Kenya airways made a loss of over USD250million in the last financial years yet Kenya airways is one of Africa’s top airlines that is clearly visible.

Many people have argued that Uganda needs an airline for various reasons prestige, carry exports, carry Ugandans, have a place where you can speak Luganda and all other arguments. At the end of the day, it zeros down on costs and revenues. Uganda co-owned the famous East African airways until the breakup of the East African community in 1977. The breakup was engineered reportedly by Charles Njoonjo in Kenya. That was during the Idi Amin period when the Ugandan economy was a real basket case. It only made case to part ways at that time. Since the operational headquarters of the East African airways were in Kenya, Kenya took all the planes and Uganda and Tanzania went out without much benefit from the community. It is not surprising that much later in the 1980s as the three countries restored their political relationships Kenya compensated Uganda and Tanzania for the loss of the assets that they jointly owned in the then East African community.

Idi Amin, who at that time was basking in money from exports bought new planes for Uganda airlines. Indeed people acclaimed him for this decision. At that time, there was a frost in Brazil for several years and Brazil’s coffee exports volume had gone down. This made Uganda cash in on the coffee export boom. Indeed even Kenya benefited as coffee was smuggled and shipped to markets in Europe at market prices. Buying the planes as Amin did, gave Uganda an airline but it did not create a business. The business had been taken over by Kenya airways.

Airline business is made up of routes and bi lateral agreements. Uganda airlines was able to fly with subsidies from government. The airline limped on in various ways until I personally recommended its closure sometime in the late 1990s. By the time we closed it, it was making a loss of approximately usd1million a month. The Kenya airways loss for the previous year is said to be USD250million. In the last 3 years the cumulative loss is USD422million dollars. In the region, Kenya airways looks invisible. After Ethiopian airlines, it is one airline that goes to all African capitals followed by South African airlines I guess. It has been around for a long time having taken over the East African airways with all its assets and routes and staffing. It is partly owned by the Kenyan government which owns about 30%, KLM the Dutch airline 27% and the rest of the shares by the private owners. You would expect Kenya airways to be making money but why the loss.

The biggest factor is competition. While Nairobi is a hub in the region it doesn’t dominate traffic into Nairobi. The government owned companies in the Middle East have all the money and have set up airlines with new equipment and have cut prices. Their location in the Middle East gives them an advantage over Kenya airways. Kenya airways therefore cannot compete favourably with Middle East airlines which tank fuel at a lesser cost than Kenya have more passengers than Kenya airlines. In the process, being lower cost operators than Kenya airways. KQ has also had a challenge of adding new expensive equipment to be able to match that of the rich Middle East airline. In the recent years, they have bought new planes including 878 Boeing Dreamliners. These have been bought on credit and they have to pay interest.

Location is another factor while Kenya is a powerhouse in the region and so is KQ, KQ is operating in a poor location. I am not sure how many Kenyans fly on KQ later on the Africans in the region where it flys. Compared to European airlines or Middle East airlines, KQ operates in regions with low incomes. I have mentioned fuel as one of the contributing factors to the loss and I guess there are many factors however KQ is a small airline in a bug business. Despite being owned partly by the Dutch KLM, I think KQ does not meet the criteria Mbire talks about.

In recent years, Uganda has been bashed for not having an airline yet Rwanda has one. Of course nobody talks about the investment Rwanda has made in the airline. Sometime back, I noted Rwanda had out over USD 200 million in the airline. These airlines make us proud as nationals but in the global competitive space, they can only make losses.

Uganda has no critical mass flyers yet who would create the need for an independent airline Uganda does not have the critical business yet to warrant it yet. We would be having our priorities wrong if among all our pressing needs, an airline was worth investing in at this time.

I was looking at the solution for Kenya airways. Kenya airways will get additional debt to enable it restructure its balance sheet unless government comes in with more equity, of course tax payers money, this balance sheet cannot be cleaned.

Uganda should pick the lesson from Kenya airways.

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Local Business

Cab driver wins big in MoMo Nyabo promo, to invest in fish business

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Ayebale Ismail who won Ugx 4.2 million in MoMo Nyabo promo is going to invest his cash prize in Fish business.

Ayebale Ismail who won Ugx 4.2 million in MoMo Nyabo promo is going to invest his cash prize in Fish business.

By Our Reporter

Through its promotion dubbed MoMo Nyabo Together, MTN Uganda is giving out up to Ugx 5,000,000 shillings to two winners every weekday in a bid to support Ugandans as they rebuild from the financial devastations caused by the COVID-19 pandemic.

Among the recent lucky winners is 34-year-old Ismail Ayebale, an airport taxi driver walked away with Ugx 4,200,000 shillings. The airport cab driver who has been out of business since the closure of the airport was overjoyed to learn that he had been chosen as a lucky winner in the on-going MTN MoMoNyabo Together promotion.

Due to his Covid 19-induced unemployment, Ayebale became a fish vendor to support his family. The young man that lives next to Lake Victoria in Entebbe buys fish from various fishermen and later on dresses and sells it to people in Kampala at a profit, to make ends meet for his family.

“Life has not been the same, the money I earn now is nothing compared to what I would make before the COVID pandemic,” Ayebale said as he narrated how tough the times have been for the past five months.

The MTN Marketing Coordinator for Central Region, Jimmy Ssempuuma congratulated Ayebale while handing over his cheque of Ugx 4,200,000 shillings. He empahises MTN’s commitment to supporting its customers though such promotions.

Ayebale chose to share the money he won with his mother Margret Nyakaisiki. An excited Nyakaisiki over a phone conversation ululated as she vehemently thanked MTN Uganda for giving back to her son who in turn shared with her.

Ayebale noted that he had always heard about the MoMoNyabo campaign but always thought it was a hoax since he had never won. He however confirmed in the presence of his family that having been named a lucky winner, he is now a strong believer of the MoMoNyabo Together promotion.

To take part in the promotion that was launched last month, MTN customers simply use the MyMTN app or dial *165# to buy data or airtime as well as paying for many other services using Mobile Money.

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Local Business

MTN MoMo: Your One-stop Payment Point

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By Our Reporter 

In March 2009, MTN became the first telecom operator in Uganda to launch a mobile financial service that would revolutionize the country’s financial fabric. More than a decade later, the service has evolved into a one-stop financial transaction point that is championing financial inclusion across the spectrum as it transforms the country into a cashless economy.

From the most basic feature of sending and receiving money, to performing simple tasks such as buying airtime and data in the comfort of your home or paying bills and school fees, you can now transact across the borders as well as pay taxes to the Uganda Revenue Authority, make Kampala City Council Authority Payments and make donations and so many other payments on your phone using MTN MoMo.

According to Stephen Mutana, the General Manager Mobile Financial Services at MTN Uganda, paying for goods and services is easy, safe and convenient when you keep some money on MTN MoMo.

He added that, “the experience of using MTN MoMo has been made even better with the MyMTN app.”

The MyMTN app is available and can be downloaded from both android and iOS app stores.

To ease the payment for goods and services, MTN Uganda launched MoMoPay, a digital payment platform that allows customers to pay for goods and services directly from their Mobile Money accounts, free of charge without having to withdraw it first.

Caroline Nakato, an ardent user of the MoMoPay service says that the payment method has simplified her life.

“I don’t have to stress with going to the bank to withdraw cash and carrying it around for shopping or paying for certain services. All I have to do is transfer it to my MoMo account and off I go. It saves me time yet it is safe secure and always available. Even when I lost my phone, my PIN number keeps my money safe,” says Nakato.

MTN MoMoPay is available in several supermarkets, shops, pharmacies, hospitals and all MTN Service Centers in towns across the country, meaning that even when one travels upcountry, they can still access the service.

Online Shopping with MTN MoMo

Another exciting innovation for people who love online shopping is perhaps, the MTN MoMocard. MTN in partnership with Mastercard offers customers the ability to make online payments using a virtual card known as the MTN MoMocard. The payments are made from the customer’s MTN MoMo account.

To enjoy this service, simply dial *165*70# and select option 1 (Create MTN
MoMocard). You will be prompted to enter your MTN MoMo PIN. The MTN MoMocard details are sent to the customer via SMS message. It costs UGX 1,000 shillings only to create the MTN MoMocard for a transaction.

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Airtel Uganda opens online shop

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Airtel Uganda Managing Director Mr. V.G. Somasekhar addresses guests during a business breakfast held recently

Airtel Uganda Managing Director Mr. V.G. Somasekhar

By Our Reporter

Airtel Uganda has launched an online shop on its website that will enable customers conveniently, quickly and safely order for devices.

The platform that is now live, provides customers a wide range of devices to include; the 4G Pocket WIFI/MIFI, WIFI Indoor Router, a pair of Broadband Outdoor and Indoor Unit and My First 4G Smartphone.

Commenting on the launch, the Airtel Uganda Managing Director V.G. Somasekhar said; “We are excited to launch this platform that will provide Airtel customers with an easy, quick and safe way to purchase our products. We strongly believe in putting our customer at the centre of everything we do. With this objective in mind, we continue to introduce digital innovations and make improvements to our processes that have put our customers in greater control of their overall telecoms experience.”

With the Airtel Online Shop, all the customer needs is internet. Through this platform, customers will be able to connect with the Airtel Broadband team which will follow up on their orders and then supply the devices they have ordered for.

“During such crucial times, it is vital for us to continuously think about our customers’ health and safety. As part of our post Covid-19 strategy, all the products will be delivered with all safety precautions like sanitation of packages and cashless payment,” the General Manager-Broadband, Brenden Kachenje said.

To make a purchase, customers will have to visit the Airtel Uganda website and navigate to the Broadband tab from where they will choose their preferred device and click the Order Now button. They will then have to fill in contact details to complete their order.

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How the MTN MoMo Nyabo promo is changing lives amidst the COVID-19 pandemic

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Betty Nanfuka and her husband jubilate after receiving their money won in MTN MoMo Nyabo promo.

Betty Nanfuka and her husband jubilate after receiving their money won in MTN MoMo Nyabo promo.

By Our Reporter 

The economic and financial constraints caused by COVID-19 have been felt by many people in Uganda. However, telecom giant, MTN Uganda through its MTN MoMo Nyabo Together Promotion, is restoring lives in ways unimaginable.

Betty Nanfuka, 54, from Buwama in Masaka district, won herself 5,000,000 Uganda shillings. Nanfuka refused to believe that she had won till she received the actual MTN team at her residence in Buwama.

The mother of twelve and grandmother of ten danced and jubilated while welcoming the MTN team to her residence in Buwama.

Nanfuka said she would use the money she has won to finally build a permanent structure; “I intend to immediately buy iron sheets so that I can build my dream home. With the rest of the money I will be able to invest in farming as I already had a nursery bed for my tomatoes.”

A security conscious Nanfuka narrated how she later on had to inquire from the area chairman of Sango sub county if indeed MTN had an ongoing promotion since she does not have a television set and barely uses her radio. After confirming the truth, an overly excited Nanfuka even failed to sleep as she resorted to praying the rosary since it all felt like a dream to her.

Nanfuka has been a loyal client to the MTN brand especially its mobile money service that she uses to pay for Ready Pay solar.

Nanfuka chose her husband Leonard Kawuma as her beneficiary; “He knows how far we have come,” she said, in reference to her husband as they danced together.

Kawuma received 2,000,000 Uganda shillings as his wife received 3,000,000 Uganda shillings.

Amidst the global COVID-19 pandemic, one’s worst nightmare would be falling sick of either COVID-19 itself or any other ailment. As many struggle to afford feeding and accommodation bills, the last bill one would want to incur is a medical bill.

Despite all the financial challenges that came with the pandemic, Nalongo Kevin Namagembe a resident of Kikoni had accumulated medical bills that had stripped her of all her finances yet she still had more medical bills to meet. Namagembe who is a Manager at Intertrade Global Eastern region stationed in Malaba has not been able to resume work because of her health complications.

Nalongo Kevin Namagembe from Makerere-Kikoni won Ugx 4.2 million from the MTN MoMo Nyabo Promotion

Nalongo Kevin Namagembe won Ugx 4.2 million from the MTN MoMo Nyabo Promotion

Fortunately, she won Ugx 4,200,000 shillings in the on-going MTN MoMo Nyabo Promotion and with this money, she will be able to treat her hand that was paralyzed by the illness.

During the lockdown Namagembe used up all she had whilst footing her medical bills: “Transport alone was expensive as I was normally charged 25,000 to get to Mulago from Makerere-Kikoni,” she said. Namagembe thanked God for not forsaking her and using MTN to bless her at a time she needed it the most.

Namagembe further said that her health was her major priority and she would use the money she had won to pay for her therapy as well as purchase the different medications she had been advised to buy.

“I can now breathe. I am now able to afford the natural remedies my nutritionist had recommended as well all the medicine I need.” Said a happy Namagembe. She shared the money with her father, Matthew Mukasa Ssentamu.

Apart from the 2 daily winners of up to UGX 5,000,000, 250 people win 50,000 shillings directly every day. All you have to do is pay using MTN MoMo and stand a chance to win.

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