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Kenya Airways faces
the continent’s debt will increasingly
become politicized between Western
Most importantly, African states can renationalization
creditors and China.

only remedy the growth-suppressing
burden of debt through renewed growth
in their own economies. It is imperative
that Africa’s aspiring emerging
economies embrace true structural
reform in order to unlock growth and
enhance their competiveness for the
longer term. Ultimately this should
become the tangible legacy of the
COVID-19 crisis.
Digitalization
Kenya Airways plane
COVID-19 is acting as an accelerant for
the adoption of digital technologies, as he government of Kenya plans to a group of small investors (2.8%), and
companies seek to boost competiveness Tnationalize the loss-making airline KQ staff (2.4%), while the largest chunk
by slimming down and reducing after attempts in the past failed to get (48.9%) is already state-owned.
established costs in their business. KQ out of the red. Kenya’s parliament
Embracing remote work could impact backed this step in an anticipating The persistent under performance of
many economies that are ill-prepared decision taken already last fall. The the “The Pride of Africa” , and national
for rapid change driven by technology Nairobi-based carrier (Code: KQ), strategic interests compelled the
government to push the nationalization
and behaviour. This shift could delay an mismanaged for years and hit hard of KQ to secure its survival.
economic recovery in many developing by the Covid-19 pandemic, needs to
African states. But there are exceptions. cut down its network, ax jobs, and Sources indicate that the nationalization
Rwanda is seeking to set itself up as a restructure its entire business. The all- model is based on the Ethiopian Airline
tech-enabled services economy that is round cleanup operation is cushioned and provide for a holding structure
better able to leverage innovation in a by with various sub-units of which Kenya
post-COVID economy. Airways will become one division. The
KQ has been making loses for many others are Kenya Airports Authorities,
The current crisis will leave lasting scars years now, the outbreak of the Covid-19 Jomo Kenyatta International Airport,
in a new but challenging world order. pandemic, has only fueled the situation. and a centralized Aviation Services
The crisis has undoubtedly revealed Year after year, since 2013, Kenya College. In a nutshell: The Aviation
the fragility of the growth models of Airways has remained in the red. In Holding will act as a control module and
developing countries and threatens to fiscal 2019, the airline posted losses guardian of the financial architecture,
deepen the divide between advanced amounting to US$122.2 million (€107.8 while the 4 subdivisions are largely
economies and the Global South. million). With the airline’s fleet grounded responsible for their own doing within
Rwanda’s president Paul Kagame has due to the COVID-19 pandemic, the the framework defined by the Holding.
said that it could take “a generation or overdue restructuring of the airline’s Plans are underway for the state to
more” for many African countries to main and auxiliary operations is being acquire the minority interests in the
recover from the pandemic. speeded up, according to reports equity. Negotiations on prices and
from Kenyan aviation industry and
How African states respond and announcements by government. After conditions are unlikely to be easy, and
adapt in the coming months to these a lot of disagreements on the matter, they are held under time pressure,
destabilizing forces will have significant parliament finally approved the plan. because international air traffic is
implications for their future economies picking up again with
and societies. The future appears to be Kenya Airways shares were on 03JUL20 KQ’s is back in the air with flights from
one of increasing divergence between suspended from trading on the Nairobi Nairobi to Paris, London, Amsterdam,
the advanced and developing world. Stock Exchange to for three months. Guangzhou, Dubai, Accra, and
The ability to counter the crisis and Hours before, KQ stock on the bourse Lagos, all operated with Boeing 787-
adapt will require a change in many rose by 6.39% to Ksh3.83 per share 8s. In addition, neighboring African
stagnant political systems of African (US$0.03), attributed to speculations countries such as Tanzania or Uganda
states that continue to impede change, that the government could buy out are serviced with passenger B737s. All
now more than ever before. If this shift minority shareholders at favorable in all, the carrier has 40 aircraft in its
does not take place, then the quest for financial conditions. These are a group fleet of which 2 are Boeing-737 Special
structural reform and inclusive growth of 10 local banks holding 38.1% in KQ, Freighters utilized on intra-African
will remain unachievable. Dutch airline KLM possessing 7.8%, routes and to/from Sharjah in the UAE.

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