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Dollar Scarcity: Airlines Raise Fares by 100%

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Airlines in Nigeria

The lingering foreign exchange scarcity, which has made it difficult for foreign airlines to repatriate their ticket sales proceeds for several months, has forced the carriers to increase their fares by about 100 per cent, OLAWUNMI OJO writes

Foreign exchange risk is now a major component of airfares on Nigerian routes, the country managers of top foreign airlines have revealed.

Investigation by our correspondent revealed that the airlines operating on international routes in the country had increased airfares by as much as 100 per cent as a result of the development, Punch reported.

A survey of all the major Nigerian routes flown by the foreign airlines in the country showed that the cost of return tickets had been increased by between 80 per cent and 120 per cent of the previous fares, depending on the carrier, time of booking and the season.

The survey cuts across Nigeria-North America routes, Nigeria-South Africa route, and Nigeria-Europe routes. Airfares on the Lagos-London, Abuja-London, Lagos-New York, Lagos-Atlanta, Lagos-Houston, and Lagos-Johannesburg routes were examined.

Findings also showed that local airlines operating international flights, especially Arik Air and MedView Airlines, had increased their airfares.

For instance, airfares on the Lagos-London and Abuja-London routes now cost an average of N380,000 for the economy class seat, as against the average of N200,000 a year ago on the British Airways and Virgin Atlantic Airways. This represents an increase of 111 per cent.

Similarly, on Air France, an economic ticket on the Lagos/Abuja-London routes now goes for about N360,000, while Lufthansa German Airlines charges N380,000. These represent an increase of 80 per cent and 90 per cent, respectively, when compared with an average fare of N200,000 on the routes a year ago.

A Business Class ticket now goes for as high as N3m as against the N1.5m a year ago on the Lagos-London route.

On the Lagos-Atlanta and Lagos-Houston routes, Delta Airlines and United Airlines, which used to fly Economy Class passengers for between N270,000 and N330,000 some 12 months ago, now render the same service at an average fare of N600,000, depending on the time of booking. This represents an increase of about 100 per cent.

South Africa Airways and Arik Air, which used to fly the Lagos-Johannesburg routes for between N100,000 and N120,000 for the economy class, now fly the route for between N180,000 and N220,000, depending on the time of booking and the season.

The Lagos-Paris route, which used to go for N180,000 on the average, now goes for around N400,000. This represents an increase of 120 per cent.

Operators link the increment in fares to the scarcity of foreign exchange to attend to the operational needs of the carriers and the erosion in the value of the ticket sales proceeds, which are now stuck in banks due to lack of forex to repatriate the funds.

Late last year, the new administration of President Muhammadu Buhari had unveiled a fiscal policy, through the Central Bank of Nigeria, restricting access to foreign exchange and funds transfer out of the country.

While this has had advantages for some sectors of the economy, foreign airline operators have complained of their inability to repatriate revenue to their operational bases as a result of the new policy.

An official of one the airlines told our correspondent that the carrier had close to N90bn as accumulated earnings in banks, which it had been unable to repatriate.

He said that the airline industry relied heavily on cash to meet its commitments, adding that it was sad that the government was not seeing things this way.

With huge airline revenue in the vaults of the banks, some of the operators nursed fears of being exposed to risks should the pressure on the naira lead to the devaluation of the currency, which could erode the value of the funds by about 35 per cent to 45 per cent.

Following the difficulty in repatriating earnings from Nigeria, some of the airlines initially began restricting cheap fares on the Nigerian routes in the last quarter of last year, leading to an indirect hike in fares.

At the time, the effect was felt more on second tier routes from Lagos-London-Atlanta, Lagos-London-New York, Lagos-London-Miami, Lagos-London-São Paulo, Lagos-London-Houston; or Lagos-Frankfurt-New York, Lagos-Frankfurt-Chicago, Lagos-Frankfurt-Los Angeles, and Lagos-Frankfurt-Shanghai.

Citing Nigeria’s slowing economy amid forex scarcity, some international airlines are now contemplating reducing flights to the country or operating smaller capacity aircraft as a short-term measure.

However, following complaints by the airlines, representatives of the International Air Transport Association are said to have pleaded with the CBN Governor, Godwin Emiefele, to intervene in the matter and make dollars available to them.

But the move has yet to yield any positive results.

The foreign airlines also reportedly met with the Minister of Transportation, Chibuike Amaechi, and urged him to look into their case.

A spokesperson for one of the airlines noted that the difficulty in repatriating revenues was affecting aircraft leases and fuelling, stating that the earnings were partly being used for fuel and renewing aircraft leases.

While the situation persists, the effect on air travellers and other businesses that depend so much on air travel has been immense.

A manager with a transport and logistic firm, Mr. Emmanuel Iruobe , said the company had incurred more costs than were provided for in the execution of most contracts this year.

Iruobe urged the government to look into the situation with a view to resolving it in the interest of Nigerians.

On their part, stakeholders in the travel industry under the aegis of the National Association of Nigeria Travel Agencies have faulted the astronomical cost of air tickets by the airlines, especially the foreign carriers.

Describing the situation where taxes that go to the airlines are higher than base fares as unacceptable, the group has petitioned the Federal Government, through the Ministry of Aviation, to caution the foreign airlines over the alleged sharp practices.

The Publicity Secretary, NANTA, Mrs. Ngozi Ngoka, opined that the cumulative effect of taxes and surcharges by airlines also generated a final price to the passenger that could be as much as double the advertised airfare for a short-haul flight.

Another stakeholder, who is the Chief Executive Officer, Gadshire Travels, Mr. Gbenga Adebayo, berated the airlines, describing the excuse of forex scarcity and multiple taxes given to increase fares as untenable.

According to him, the arbitrary increment and gap between what is charged in Nigeria and other African countries on the same routes are due to the failure of regulatory authorities to perform their duties.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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PayPal Acquires Happy Returns Logistics Business

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PayPal announced that it’s acquiring Happy Returns, a returns solution provider that offers online shoppers access to easier ways to send back unwanted merchandise to retailers without having to box it up and ship it themselves.

The company today offers a network of over 2,600 drop-off returns locations in the U.S., including those in over 1,200 metros and in every U.S. state.

It also has relationships with hundreds of brands that have been using its returns software and reverse logistics services. The company says it will continue to offer its returns experience to online retailers and shoppers as a part of PayPal.

Founded in 2015, Santa Monica-based Happy Returns’ value proposition was to take some of the overhead and cost out of the returns process for online retailers. Because online shoppers can’t inspect items they buy directly, online retail tends to see higher return rates, especially in apparel. Happy Returns found that online items are 3 to 4 times as likely to be returned than those purchased in-store, for example.

Meanwhile, today’s retailers have to compete with giants like Amazon and Walmart, both of which enable returns more easily for their customers by way of their large brick-and-mortar footprints — Amazon with Whole Foods other locations, and Walmart with its own stores. In fact, the foot traffic that offering an Amazon returns desk or locker system in-store has led retailers like Kohl’s and Stein Mart to embrace the enemy by catering to shoppers with Amazon returns in their own stores.

Today, the Happy Returns solution offers a combination of software, services and logistics that allows retailers to manage their returns through their own retail stores, by the carrier, as well as through Happy Returns’ “Return Bar” locations. These are found in physical retail stores like Paper Source, Sur La Table, Cost Plus World Market, and others. The service has been used by several digitally native brands, including Everlane, Rothy’s, and Parachute Home, among others.

Happy Returns has also been closely working with PayPal throughout its history, it notes. And notably, PayPal made a strategic investment in the business in 2019, as part of an $11 million financing round.

Following the deal’s close, Happy Returns will continue to work with retailers and shoppers both on and off PayPal’s platform, it says. The company’s co-founders, David Sobie and Mark Geller, and its full 120+ team will join PayPal and will report to Frank Keller, VP Consumer In-Store and Digital Commerce at PayPal.

PayPal is not disclosing the deal terms. To date, Happy Returns had raised $25 million in funding.

“This is an incredibly exciting milestone for our company, and it would not have been possible without the hard work and dedication of our entire team,” an announcement on Happy Returns’ website reads. “We are so proud of what our team has accomplished and are grateful for the tenacity, creativity and empathy Happy Returns employees bring to work each day. We are confident that the best is yet to come, and are looking forward to our next chapter as part of the PayPal organization.”

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MoneyGram and Coinme Partner to Expand Access to Bitcoin

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MoneyGram International, a global leader in cross-border P2P payments and money transfers, and Coinme Inc., the largest licensed cryptocurrency cash exchange in the U.S., announced the launch of a new partnership to enable the cash funding and payout of digital currency purchases and sales.

The partnership, which utilizes MoneyGram’s modern, mobile and API-driven payments platform and Coinme’s proprietary cryptocurrency exchange and custody technology, will bring bitcoin to thousands of new point-of-sale locations in the U.S., with plans to expand to select international markets in the second half of 2021.

“This innovative partnership opens our business to an entirely new customer segment as we are the first to pioneer a crypto-to-cash model by building a bridge with Coinme to connect bitcoin to local fiat currency,” said Alex Holmes, MoneyGram Chairman and CEO. “Our unique, global network is an incredibly valuable asset, and we’re excited to open our platform to Coinme as we increasingly look to capture new growth by monetizing our network to new use-cases.”

Global cash on and off-ramps ensure access to bitcoin

The MoneyGram and Coinme integration will provide a fast and easy way for customers to purchase bitcoin with cash and withdraw bitcoin holdings in cash. It is specially designed for customers who may be interested in utilizing bitcoin for the first time. With less than 20,000 cryptocurrency kiosks in the world today, the MoneyGram and Coinme partnership will further expand access to bitcoin and potentially other digital currencies by creating thousands of new point-of-sale locations to buy and sell cryptocurrency.

“MoneyGram has spent more than 80 years building one of the world’s largest P2P payment networks,” said Neil Bergquist, Coinme CEO. “By integrating its global infrastructure with our licensed crypto exchange technology, we can enable the purchase and sale of cryptocurrencies across its system using cash. This is a major milestone for the bitcoin and cryptocurrency communities, and for the millions of people who will benefit from a trusted, easy and affordable onramp to digital currency.”

The service will be available at select MoneyGram locations starting in the U.S. in the coming weeks. Additional countries and cryptocurrencies will be made available shortly thereafter.

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International Breweries To Train 500 Young Entrepreneurs Through Kickstart Initiative

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Kickstart Initiative - Investorsking

As part of its commitment to bringing people together for a better world and its objective of delivering impactful, developmental and sustainable projects, International Breweries Plc through its social investment arm, International Breweries Foundation has launched the 6th edition of its Kickstart entrepreneurship programme recently.

The initiative is targeted at enterprise growth and development for young entrepreneurs between the ages of 18 and 35.

During a media briefing to update the public on the process of this year’s edition, Managing Director, International Breweries Plc, Hugo Rocha expressed delight that the Kickstart Initiative had evolved from the regional programme it used to be, to an inclusive national programme that reaches the six geopolitical zones and 36 states of Nigeria.

“Over the years, we have held the conviction that the energy, zeal, and brilliance of the youths of Nigeria who constitute about 70 percent of the total population should be tapped and channelled to productive use. This is the logic behind Kickstart – to promote a culture of entrepreneurship among young people through training, provision of capital and mentorship,” Rocha said.

Rocha concluded his remarks on a high note, stating that, “as International Breweries celebrates its 50th Anniversary this year, I am pleased that the results of a 3-year impact assessment study that we commissioned on Kickstart came out positive and gives us the confidence to continue to support young people to achieve their dream of entrepreneurship. We remain steadfast in our commitment towards the economic development of Nigeria”

Also speaking at the press conference, Chairman, Advisory Board, International Breweries Foundation, Peter Bamkole explained that International Breweries Plc and its foundation is dedicated to continuing to contribute its quota towards tackling the twin challenges of unemployment and poverty while promoting Decent Work and Economic Growth in line with Goad 8 of the United Nations Sustainable Development Goal (UNSDGs).

“By creating Kickstart, International Breweries Foundation set out to be the nursery of innovation in a business where budding enterprise managers are groomed—held by the hand and taken through the rigour of entrepreneurial work. We aim to produce well-rounded entrepreneurs who understand and are prepared to put in the work it takes to do business successfully in a unique climate like ours.” Bamkole said.

Over the past five years, the Kickstart initiative has provided training, mentoring, and seed capital of N325,136 million (in total) for 274 grantees; 708 direct beneficiaries and 2,832 indirect beneficiaries across a wide range of business sectors; with the result of the creation of about 571 jobs and 1,392 new jobs projected across the six geopolitical zones of Nigeria.

Speaking on the mechanics of the award, Legal and Corporate Affairs Director, International Breweries Plc, Temitope Oguntokun revealed that the award is in three phases: the application phase, the training phase and the pitch fest phase which is the final selection of grantees by judges.

She explained that the Kickstart Initiative will be incorporating an expansive training module that will train 500 young entrepreneurs online, with a number of them going into the bootcamp. This year’s edition also features a streamlined search for entrepreneurs into Agriculture, Modular Retailing, Circular Packaging (Recycling), Technology, and Renewable Energy sectors.

“After a transparent selection process on the Enterprise Development Centre (EDC) platform via the link, https://reg.smetoolkit.ng/program-apply/kickstart-nigeria-2021, which will open on the 20th of May, successful applicants will be equipped with critical skills and training on entrepreneurship by experienced entrepreneurs and corporate professionals during a 2-day boot camp. They will partake at the pitch fest where a panel of judges will appraise their proposals before final selection. Winners of the pitch fest will then be awarded grants at the awards ceremony in Lagos,” Oguntokun noted.

The press launch which held last week in Lagos had in attendance dignitaries such as the Director for Employment, Lagos State Ministry of Wealth Creation and Employment, Mrs Iyabo Seriki-Bello, Director of Partnerships and Coordination for Small and Medium Enterprises Development Agency of Nigeria; Dr Friday Okpara; Chairman, Advisory Board, International Breweries Foundation, Mr Peter Bamkole; members of the International Breweries team, past Kickstart Alumni, mentors and a host of others joining online.

Following its trajectory of success, impact over the years, and its extensive yet immersive plans for the 6th edition, Kickstart, under the auspices of International Breweries and its foundation is geared towards transforming Nigeria into an economic powerhouse through the impact of entrepreneurship.

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