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How COVID-19 Led to $8.6 Billion Loss for African Airlines in 2021

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Omicron

The report which shows how the COVID-19 Pandemic led to an $8.6b loss for African Airlines in 2021, also projects another loss of  $4.9 billion in 2022

The report compiled by African Airlines Association (Afraa) and obtained by Investors King reveals how strict travel restrictions by many African countries led to the depletion in revenue of most airlines in 2021.

The pandemic was a major determining factor for the progression of many sectors of the economy in 2021. And while for many, losses were accounted due to the novel COVID-19 virus, experts in the aviation sector believe that less stringent travel restrictions in 2021 would have reduced the losses incurred by many African airlines.

The pandemic heightened losses for many sectors in 2020 and by 2021, a number of these sectors were said to be slowly recovering from their losses. And although the $8.6b loss according to Afraa, is a little less than the $10.21 billion revenue loss recorded by 2020, the result still shows a 49.8% decline when compared to the revenue recorded by the sector prior to the pandemic in 2019.

Investors King also collected that the report by AFraa disclosed that while a loss of $8.6 billion was incurred in 2021, in 2022, another loss of  $4.9 billion may be incurred in 2022 owing to stricter travel restrictions and an ongoing crisis in Ethiopia.

The political crisis in Ethiopia may appear to have an even more devastating effect in the Eastern African region. According to the report, in 2021, only three African airlines continued with their international routes expansion across Ethiopia.

Other key takeaways from the report are the report on traffic for Africa Airlines and its projection as well as the report on safety practices for African Airlines under the year in review.

Traffic Projection

The report established that the pandemic reduced the traffic demands in 2020 and 2021, while also projecting a rise to meet the levels of 2019 before the pandemic. According to the report African airlines carried an estimated 43 million passengers in 2021 which represent around 45% of 2019 traffic while also projecting a rise in traffic by 67 million passengers in 2022

African Airlines Safety

The report went ahead to reveal that the total number of fatal accidents involving commercial airlines in 2020 were 5 – of which resulted in 301 fatalities. This is a welcomed improvement when compared to 2019, where there were 8 fatal accidents with 249 fatalities. According to the report, these accidents are notably from airline fatal accident records outside Africa, as no fatal accidents occurred in the African region or involved African regular carriers.

The report commended many African governments and aviation stakeholders for their efforts in ensuring that safety measures are carried out by various airlines operating in the regions. According to the report, under the year in review, there are 43 airlines registered in the (International Air Transport Association ) IATA Operational Safety Audit (IOSA).

Owing to the incurred loss in revenue, The AFRAA Secretariat continues to advocate for financial support to African airlines owing to the critical effect of the COVID-19. Investors King recalls that as of October 2021, a total of US$2.9 billion in various forms of support was extended to some airlines by their governments. The most African government to announce such according to the report is the Mauritius Government.

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N1.3bn Fraud Allegation: Court Orders Arrest of Dana Air MD For Not Showing Up For Arraignment

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Mr. Hathiramani Ranesh

A Federal High Court in Abuja has ordered the arrest of the Managing Director of Dana Air, Mr. Hathiramani Ranesh for failing to appear in court for his arraignment in the alleged N1.3 billion fraud preferred against him by the Office of the Attorney-General of Federation (AGF).

The Federal Government had on October 10, 2024, asked the court to issue a bench warrant for the arrest of Dana Air after failing to honour invitation for his arraignment.

The AGF had filed a six-count charge against Ranesh and two others and marked Dana Group PLC and Dana Steel Ltd as the 2nd and 3rd defendants, respectively.

The prosecution argued that Ranesh and the two companies, along with others still at large, committed a felony between September and December 2018 at the DANA Steel Rolling Factory in Katsina.

They were accused of conspiring to remove, convert, and sell four units of industrial generators—three units Ht of 9,000 KVA and one unit of 1,000 KVA—valued at over N450 million. These assets were reportedly part of the Deed of Asset Debenture used as collateral for a bond, which remains valid.

The defendants and others at large were said to have conspired to fraudulently divert N864 million between April 7th and 8th, 2014, at House No. 116, Oshodi-Apapa Expressway, Isolo-Lagos.

This sum, reportedly part of the bond proceeds from Ecobank intended for revitalizing production at Dana Steel Rolling Factory in Katsina, was allegedly diverted for unauthorized purposes.

They were also accused of conspiring to transfer N60,300,000 to an Atlantic Shrimpers account (No: 0001633175) at Access Bank, fraudulently diverting funds earmarked as part of the Ecobank bond proceeds for resuming production at the Katsina factory.

The cumulative amount involved in the charge totals N1,374,300,000. Each offense is said to be contrary to and punishable under Section 516 of the Criminal Code Act, Laws of the Federation of Nigeria, 2004.

After Mojisola-Okeya Esho, counsel to the Federal Government, had requested for bench warrant to be issued against Ranesh, the defence lawyer, B. Ademola-Bello, disagreed with Esho, saying that they had filed a preliminary objection challenging the jurisdiction of the court to hear the matter and that the prosecution had already been served.

Delivering ruling on the application, Justice Obiora Egwuatu, agreed with Esho that Ranesh’s arrest was necessary due to his failure to appear in court despite being served with the charge and several proceedings having taken place.

Justice Egwuatu held that, according to Section 184 of the Administration of Criminal Justice Act (ACJA), 2015, the court has the authority to issue an arrest warrant against any defendant who fails to attend court sessions.

Egwuatu ordered that Ranesh must appear before the court on January 13, 2025, before any objections can be raised.

Consequently, he adjourned the matter till January 13, 2025, for hearing.

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Persistent Service Disruptions In Banks Paralyze Activities At Ports, Many Cargoes Trapped 

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Lekki Deep Seaport

Activities at the Apapa and Tin-Can Ports in Lagos State have been paralyzed as cargoes have remained uncleared following persistent disruption to some online services of some commercial banks in Nigeria.

It was gathered that the banks suffer network problems due to the upgrade of their electronic banking portals.

To this end, business moguls have been unable to pay the Customs duty necessary for the clearance of their cargoes at the ports.

A visit to the ports showed that many import units of containers have not been cleared because their clearance documents are still trapped in some banks due to ongoing network migration issues.

If the banking disruptions persist and cargoes continue to lie fallow at the ports, experts have said that prices of goods at Nigerian markets may soar.

Many persons who have been working at the ports have also been rendered jobless as activities at the ports remain in limbo.

Confirming the situation at the ports, the National President of the Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), Mr. Frank Ogunojemite said many jobs are stuck because agents have been battling to settle payment part of their clearance schedules.

Ogunojemite revealed that the clearance of cargoes at the ports usually goes through Form M and the Pre Arrival Assessment Report (PAAR), said agents have to go through a commercial bank to pay their Customs duty before any clearance process can be done.

He said if the banking system or network is down, it will be impossible for Customs duty to be paid and that container will remain in the port accumulating rent which comes with storage and demurrage payments.

According to him, prices of goods may soar if the situation persists as cargo owners spend more for clearance if their containers spend longer time in the ports.

Preferring solutions, he called on government to introduce ‘compensatory law’ where importers are given waivers when delays to their cargoes inside the ports is not from them.

Also, haulage operators bemoaned the effect of the various banking migrations on picking of containers inside the ports.Persistent Service Disruptions In Banks Paralyze Activities At Ports, Many Cargoes Trapped

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Nigerian Businesses Face Tougher Times as PMI Drops to 19 Months Low of 46.9

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Nigerian businesses continued to face headwinds as the Purchasing Managers Index published by Stanbic IBTC shows a 19-month low. 

According to the report released on Friday, business conditions took a hit and PMI dipped from 49.8 points in September to 46.9 points, the steepest decline since March 2023.

For context, a PMI reading above 50 points indicates growth in business activity. Conversely, a reading below 50 points indicates contraction, suggesting deterioration consequent to an economic downturn.

According to the report, businesses faced pressures from the local currency weakening, higher fuel prices and increasing cost of transportation.

This has also forced the hands of businesses to increase prices to sustain operations, which the report stated has led to a reduction in new orders and business activity.

Most importantly, confidence in the business sector plummeted to the worst ever since the organisation started documenting PMI in 2014.

“Overall input costs rose at one of the sharpest rates on record, with selling prices increased accordingly. This resulted in marked reductions in new orders and business activity, while business sentiment was the lowest in the survey’s history,” the report read in part.

A positive light in the report was that some companies managed to add a few new hires, extending a six-month trend of job creation. The downside to this was that the companies employed these staff on a short-term basis.

The report also stated that companies are making efforts, now more than ever, to help their staff stay afloat in the current economic situation.

“Meanwhile, efforts to help workers with rising living costs meant that staff pay was increased to the greatest extent in seven months,” the report added.

Metrics like the private sector output, volume of orders, and quantities of purchases made by customers all recorded steeper values than they did in September.

Trends showed that prices, cost of staff maintenance and input prices, on the other hand, recorded very sharp increases, with some metrics posting record hikes since March 2023.

Inflation in the general Nigerian macro environment is telling in every quarter and businesses are not exempt.

Analysts told Investors King that special interventions will help ease the pressure on companies, but warned that risky conditions attached to these measures may scare off firms from accepting them.

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