Page 1

PROCUREMENT & LOGISTICS May, 2017 Issue No.: 10/2017

Africa’s Leading Supply Chain Journal KSHS. 400.00 TSHS. 8,000.00 USHS. 12,000.00 RFR. 4,000.00 USD. 5.00

Management

Tapping into growing opportunities in the leasing market

16 Proc Mag May 2017.indd 1

World Bank support Africa’s top digital entrepreneurs

30

Azure cloud services to fuel digital transformation

34

Education on fleet management and vehicle tracking

19/05/2017 12:34:15


Proc Mag May 2017.indd 2

19/05/2017 12:34:16


Editor’s note PUBLISHER Proc & Logistix Consult Limited

Hello Reader!

EDITORIAL AND MARKETING OFFICE View Park Towers, 13th Floor wing A Suite 1

Procurement & Logistics Magazine @ LogisticsProc CHIEF EDITOR Okumu S. Biko

In the May edition, we looked at leasing- thus tapping into growing opportunities in the leasing market. Already a number of local corporates are developing leasing subsidiaries to cash in on new opportunities both in the public and private sectors. To digest it, we organized for a question and answer interview with a leading local bank.

PRODUCTION GRAPHIC DESIGN Amon kibet, Nicholas Amanya AUDIENCE DEVELOPMENT MANAGER Emily Martin WRITER Sandra Dinga EDITORIAL OFFICES Proc & Logistix Consult P.O BOX 40619 00100 GPO Nairobi-Kenya, Mobile + 254713727860 Tel +254 0204404488/02044002479 info@procurementandlogisticsonline.com www.procurementandlogisticsonline.com ADVERTISING For information on advertising in future Issues of the magazine, please contact: OKUMU STEVE BIKO +254 721 986284 SANDRA DINGA +254 713 199012 E-MAIL: adverts@procurementandlogisticsonline.com SUBSCRIBER CUSTOMER SERVICE

Procurement & Logistics Management Magazine is a six times publication a year and circulated to professionals in the Supply Chain industry, members of relevant associations, government bodies and other personnel in the procurement, logistics and finance industries as well as suppliers in Eastern Africa. The editor welcomes articles and photographs for consideration. Material may not be reproduced without prior permission from the publisher. DISCLAIMER: The publisher does not accept responsibility for the accuracy or authenticity of advertisements or contributions contained in the journal. Views expressed by contributors are not necessarily those of the publisher. © All rights reserved. No part of this publication may be copied or reproduced without prior permission from the publisher.

I

t is another time we present to you another edition of procurement and logistics management Magazine. The transportation and logistics industry is what knits together global economies. As Industry leaders demand for a comprehensive publication to keep pace with this dynamic marketplace. Procurement and Logistics Management Magazine therefore becomes their must read publication to stay abreast of critical issues and trends.

P.O BOX 40619 00100 GPO Nairobi-Kenya, Mobile + 254713727860 Tel +254 (0)204404488/(0)2044002479 info@procurementandlogisticsonline.com www.procurementandlogisticsonline.com

On transport and logistics; the magazine looks at how Standard Gauge Railway (SGR) is set to revolutionize cargo and passenger transport in Kenya even though some analysts say Kenya could still achieve the SGR Target just by upgrading MGR at only KSh 20bn. The Magazine features how road tolling is gaining momentum in East Africa and trying to understand the value of IoT connectivity in private and public transportation. Still on transport, we have also learnt that Rwandese cargo is increasing at the port of Dar es Salaam, that efficiency at the Port of Dar es Salaam is attracting more Shipping Line and that Kenya is construct new berths at Lamu port to attract more investors KQ and GE donate high tech aviation training devices to TUK, to boosting aviation training. The RwandAir has also started flying to Zimbabwe after 10 years negotiation and the reopening of Abuja Airport in Nigeria In our local briefs we feature Kenol selling Sh378 million shares to Tanzanian tycoons, KQ increases fare by Ksh 8000, Tanzania pilots and engineers to undergo training in Ethiopia and South Africa’s Transnet unveiling first locomotive manufactured Africa. Through our print and digital publications, website, industry associations and independent editorial, Procurement & Logistics Management Magazine keeps business executives, investors and supply chain professionals in the know. Each issue features companies in the transport, shipping, supply chain management and logistics sectors, and provides readers with timely interviews that showcase best practices in efficiency and management. Procurement & Logistics management Magazine is the just-in-time vehicle for industry readers who want to read about, reach and influence the top decision-makers in this vital industry.

ENJOY YOUR READING Okumu S BIKO Chief Editor

Proc Mag May 2017.indd 1

19/05/2017 12:34:23


CONTENTS COVER STORY 20

NIC Bank launches leasing subsidiary

BRIEFS 4.

Kenol sells Sh378 million shares to Tanzania 5. Bridging skills gap, UAP Old Mutual trains Uber drivers on financial management 6. Tanzania pilots and engineers to undergo training in Ethiopia 7. Entebbe International Airport expansion to boost Uganda’s air traffic, cargo volumes 8. Addressing congestion,Tanzania’s BRT project enters Mwanza City 9. Modjo Dry Port project in Ethiopia receives $150 million funding 10. Transport firm offers driving classes to address skills shortage in South Africa’s trucking sector 11. South African taxi industry set for major make-over 12. $2 billion international cargo airport project launched in Nigeria 13. Qatar Airways to expand cargo operations 14. Getting a successful Request for Quotation (RFQ) 15. Negotiation Tips -an expert’s advice! 2

TECH BUSINESS 16. World Bank to support Africa’s top digital entrepreneurs 17. Importing from China to Kenya: An ingredient in small business 18. Newtechnology to predict spot market prices for individual loadings 19 Here are some of the ways e-commerce can reduce cost

19

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 2

19/05/2017 12:34:25


PORTS

38.Rwandese cargo increase at the port of Dar es Salaam -TPA 39. Efficiency at the Port of Dar es Salaam attracts more Shipping Line

34

39

FLEET MANAGEMENT 34 Education on fleet management and vehicle tracking -Safetrac 35. What can we expect from Automotive Telematics industry in 2017

26

TRANSPORT AND LOGISTICS 36 26.

REPORTS 25. Upstream Oil and Gas Awards premieres in Nairobi 25. Tanzania to host first Global Logistics Summit World Bank to support Africa’s top digital entrepreneurs

25

From MGR, SGR now set to revolutionize cargo and passenger transport in Kenya 29. Understanding the value of IoT connectivity in prvate and public transportation

AVIATION ROUNDUP 36. Boosting training: KQ and GE donate high tech aviation training devices to TUK 37. Nigeria to construct modern aircraft assembly plant

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 3

3

19/05/2017 12:34:28


BRIEFS

Kenol-kobil sells stake to a Tanzanian investor Kenol-Kobil sold 30.2 million shares to Tanzanian billionaires Aunali and Sajjad Rajabali, equivalent to a 2.06 per cent stake in the oil company.

A

ccording to the company’s latest annual report, the shares have a market value of Sh378 million and have seen the Rajabalis rank ninth in Kenol’s list of top 10 investors. This latest investment in the oil marketer expands the Rajabalis’ interest at the Nairobi Securities Exchange where they made their first foray with acquisition of 22.9 million Co-op Bank shares last year. Rajabalis’ stake in the lender stands at 0.47 per cent, placing them second in the list of top individual investors after the bank’s chief executive Gideon Muriuki who retains a

2.05 per cent interest in the company. They have invested a total of nearly Sh700 million in Co-op Bank and Kenol. The duo have moved to expand their regional interests, with the investors ranked as the top individual investors in Tanzania’s largest lender CRDB Bank Plc with a 4.1 per cent stake, according to the company’s latest disclosures. Their interest in CRDB is worth Sh1 billion based on the lender’s market value on the Dar es Salaam Stock Exchange.

Rajabalis’s aggressive purchase of Co-op Bank and Kenol indicates their confidence about the firms’ future prospects. Kenol recorded a 19.7 per cent net profit growth to Sh2.4 billion in the year ended December, helped by higher sales, better margins and lower finance costs. The firm’s sales jumped 19.5 per cent to Sh103.4 billion, coinciding with an improvement in the gross profit margin from 6.7 per cent to seven per cent.

Kenya’s flight services provider to increase West Africa fare by Ksh 8000

G

overnment’s introduction of a new tax to pay for security equipment installed at the country’s main airport leaves Kenya Airways (KQ) passengers flying to Sierra Leone to pay $80 extra for their return tickets.

4

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 4

19/05/2017 12:34:29


T

he new move came after all airlines operating in the West African state were ordered to collect a new security fee $40 (Sh4,000 one way) from their passengers at the point of ticket purchase effective April 1. Sierra Leone owes Securiport, an American security firm, Sh1.2 billion for immigration control equipment installed at the Freetown Lungi International Airport in 2014 to screen passengers amid aviation threats like terrorism. Kenya Airways operates daily flights to Sierra Leone’s capital Freetown, mostly ferrying business people looking to do trade in the mineral rich country.Currently, a return KQ ticket from Jomo Kenyatta International Airport (JKIA) to Freetown costs between Sh153,000 and Sh182,000, according to the airline’s website. Meanwhile, the International Air Transport Association (IATA) has cautioned Sierra Leone government against implementing the security tax, saying higher fares will result in a reduction of 7,500 passengers per year. Leonard Balogun, the country’s transport minister, “The government has been paying for this essential service since its inception but is now constrained to continue due to the present financial situation.” West Africa represents significant number of KQ routes in the continent, making the impending ticket price increase harmful to its business. Children under two years, airline staff, as well as passengers whose transit time in is less than 24 hours and those diverted inland will be exempt from paying the tax. Vincent Coste is the KQ’s commercial director, “This (tax) would impact the cost of travel into Freetown. Through IATA, airlines have engaged the Sierra Leone government with a view to have this taxation reversed.”

BRIEFS

Bridging skills gap;

UAP Old Mutual trains Uber drivers on financial management

T

he partnership enables drivers and vehicle owners to easily raise capital for future investment via small daily savings. “Once you get to understand your financial needs, then you are on the road to financial wellness. So we have partnered with Uber, to access their clientele, that’s the drivers, and we hope we shall empower these guys, to be able to make financial decisions from a point of knowledge,” UAP Old Mutual Group MD Life business Jeremy Otieno said. The scheme has so far benefited over 100 drivers in Nairobi and Mombasa. The drive is part of a larger scheme targeting small and medium enterprises (SMEs) that create employment across the country. Otieno said the drivers can apply for the course online, add ing that lack of planning and financial literacy skills could be solved via targeted education and skills development. Apart from Kenya, the course which started in South Africa has also been extended to Ghana and Nigeria. Uber East Africa General Manager Loic Amado noted that the course dubbed ‘On the Money’ is free to Uber driver-partners in Kenya, Nigeria and Ghana. “By attending, they’ll learn to understand basic money principles, develop healthy savings habits and

UAP Old Mutual Group and Uber are partnering to train 4, 000 Uber drivers on basic financial management skills to promote a savings culture. plan a path to financial well-being,” he said. The workshops were previously run in partnership with Uber in South Africa with great results and positive feedback from the driver-partners who attended.

“Once you get to understand your financial needs, then you are on the road to financial wellness”

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 5

5

19/05/2017 12:34:29


BRIEFS

Tanzania pilots and engineers to undergo training in Ethiopia

Tanzania pilots and aircraft engineers are set to undergo training in Ethiopia;Air Tanzania Company Limited (ATCL), CEO Mr Ladislaus Matindi has said

T

he training will be conducted at Ethiopian Airlines Aviation Academy an institution operated by Ethiopian Airlines in Addis Ababa.“This is part of enhancing capacity for our employees to operate the newly acquired air crafts and others which are lined for delivery,” Mr Matindi explained. According to the CEO, it is cheaper by US $500 dollars per hour to train a pilot in Ethiopia as compared to training in United Kingdom or Canada. The deal which now awaits approval from the Tanzania Civil Aviation Authority (TCAA); the regulator has to certify and approve training institutes for pilots. “Ethiopia Airlines has well equipped training and maintenance facilities and we can benefit from their expertise.

6

The training will be for new pilots and those in service through recurrent teaching,” he remarked. At the occasion, Ethiopia Airlines’ Area Manager for Tanzania, Mr Dahlak Teferi, said the deal will provide a winwin situation between the two airlines. He pointed further that it is not the first time that the two companies are co-operating to improve the capacity of their workforce and operations. The co-operation was heightened during discussions between President John Magufuli and the Prime Minister Hailemariam Desalegn during the latter’s recent visit to Tanzania. Air Tanzania is in talks with Bombardier to trade in their single Q300 aircraft for a more modern Q400NextGen bird, which will bring the overall number of such aircraft, both operating and on order, to four.

The co-operation was heightened during discussions between President John Magufuli and the Prime Minister Hailemariam Desalegn during the latter’s recent visit to Tanzania. Ethiopian Airlines is operating a fleet of at least 15 Bombardier Q400NextGen’s and has clearance from the manufacturer to train not just pilots and cabin crew on this aircraft type but also engineers. The Tanzania pilots and engineers will be dispatched during the course of the year to undergo not just mandatory refresher training but also to obtain type rating on the Q400 Next Gen aircraft.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 6

19/05/2017 12:34:29


BRIEFS

Entebbe International Airport expansion to boost Uganda’s air traffic, cargo volumes

T

he airport expansion master plan includes the expansion of the cargo center to a capacity of 100,000 tonnes, up from the current 55,000, better units for the aviation police, expansion of the main terminal building, a larger car park and luggage-handling systems. Entebbe Airport’s Main runway will be resurfaced and will have a full strength parallel taxiway and new lighting. A new cargo terminal with its taxiways and Apron will be constructed and the rehabilitation of the secondary runway. Apron 2 serving VVIP will be also be strengthened with a new terminal building adjacent to and connected to the old building to handle 3.3 million passengers by 2023. CAA managing director David Mpango Kakuba confirmed that the earthworks for the new cargo center had been completed by China Communications Construction Company (CCCC) and the ground had been given time to settle before the construction of the building blocks continues in June 2017. “The government of South Korea

extended a grant of $9.5 million for the improvement of air navigation services and automation of Entebbe International airport,” said Kakuba during onsite tour. The existing passenger terminal opened in 1974 to accommodate 250 people arriving and 250 departing passengers. It was improved to the current capacity of 410 people arriving and 360 departing during the Commonwealth Heads of Government Meeting in 2007. The master plan projects 930 arriving passengers and 820 departing passengers during peak hours by 2033. “The expansion is critical in providing for the growth and ensuring a good customer care experience,” Kakuba said. Uganda has also embarked on a revival strategy for its flag carrier Uganda Airlines as the country streamlines its aviation sector. Several international airlines have also expressed interest in flying in passengers into Entebbe Airport. Passenger traffic at Entebbe has grown gradually to 1.3 million last year, from about one million in 2010.

Uganda projects a steady growth in air traffic and cargo volumes as it fast-tracks the expansion of the Entebbe International Airport to accommodate larger aircraft The $200m expansion project, which kicked off in March last year is being undertaken by the government of South Korea in collaboration with Uganda’s Civil Aviation Authority (CAA).

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 7

7

19/05/2017 12:34:32


BRIEFS

Addressing congestion, Tanzania’s BRT project enters Mwanza City Plans are underway to introduce Bus Rapid Transit (BRT) in Mwanza City, Tanzania as the country looks to address congestion and enhance business operations in its major cities

T

he BRT project is part of the Mwanza City Master Plan 2035 that includes a variety of projects that aim at transforming the Lake Zone Region and make it a business hub for both local and international investors in the region. Mwanza becomes the second city to have the BRT system after Dar es Salaam. BRT is a bus-based mode of mass transport operating on exclusive right-of-way lanes at the surface level. BRT aims to combine the cost and simplicity of a bus system. The city’s master plan intends to have 40m-wide roads to accommodate BRT as well as cycle lanes and landscaping, depending on the character of the surrounding area. The BRT lanes are proposed in the Primary Arterial of the plan which seeks to have a 3.65m width, appropriate to accommodate BRT, with the widely recognised Institute for Transport Development and Policy (ITDP) guidance stating that a width of 3.6m is appropriate for these types of vehicles. Three illustrative arrangements for the primary arterial roads have been considered. They are: Primary Arterial (National), Primary Arterial (CBD) and Primary Arterial (Rapid Transit), where a BRT station is provided. The Secondary arterial typically accommodates two lanes in each direction. They can carry regular bus services and BRT in CBD broken to accommodate BRT stops, which serve buses stopping on the carriageway, rather than pulling into a lay-by. This is in line with global best practice, with the effect of prioritising public transport over private transport.

8

The approach makes bus operation more efficient and attractive to users. Tanzania Road Design Manual had been used as a base for developing the road cross sections, but departures from these standards have been sought by creating Road Cross Section Guidelines, to produce appropriate road sections for the city. The spacing of roads in the proposals is broadly in line with the recommendations of the Concept Plan report. The city’s master plan also proposes a bypass road to the north of the city that will serve as an Expressway. Initially, it was planned as a dual carriageway with three lanes per direction. This road sits on a 60m right-ofway that allows for future expansion when required. The city will also have collector roads according to the investment coordinator in the region, Mr Kaswalala Benjamin. Collector roads

typically accommodate two lanes in each direction, and can have on-street parking. They can carry local bus services, but not regular bus services, and give access to larger individual plots and properties. The right-of-way of collector roads according to the master plan will have 25m-wide roads. Tanzania will this week hold Mwanza Business Forum where the BRT will be the key topic of discussion. The daylong forum is organised by Tanzania Standard Newspapers (TSN) Limited in collaboration with over 15 local and international partners.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 8

19/05/2017 12:34:34


BRIEFS

Modjo Dry Port project in Ethiopia receives $150 million funding Ethiopia’s logistics sector has received a major boost after the World Bank approved a new $150 million funding towards the country’s key transportation hub, Modjo Dry Port.

T

he project will focus on improving the Modjo Dry Port, located in central Ethiopia, 38 miles southeast of Ethiopia’s capital, Addis Ababa. The port handles 95% of Ethiopia’s trade and is a major bottleneck on the Ethiopia-Djibouti trade corridor. According to Ports Consultants Rotterdam ,Modjo Dry Port is Ethiopia’s first dry port development which started on a small scale at the end of 2009, relieing the congested Djibouti.“ The logistics sector is the backbone for industrial and agricultural growth, the success of which is crucial if Ethiopia is to meet its goals as articulated in the Growth and Transformation Plan,” said Carolyn Turk, World Bank Country Director, Ethiopia.

“The success of Ethiopia’s large-scale investment in industrial parks and the new rail line to Djibouti will depend on their connectivity to different logistics nodes along trade corridors.” The project will support investments in physical infrastructure and ICT systems, as well as regulatory improvements which will increase exports, generate jobs, and raise incomes of producers and traders. The move to a modern logistics system requires the effective participation of a variety of logistics providers. The project therefore supports public investment in critical infrastructure, and increasing the role of the private sector in providing logistical services. Consistent with Ethiopia’s Logistics Strategy, the vision for Modjo is to evolve from being a single-user dry port that focuses on customs clearance, to a multi-user, multi-purpose facility,

South Africa’s Transnet unveils first locomotive manufactured in Africa

where third party logistics providers gather together to provide modern services. “Higher-than-average trade costs are undermining Ethiopia’s international competitiveness,” said Klaus Tilmes, Director in the World Bank Group’s Trade & Competitiveness Global Practice. “By enhancing the perfomance of the Ethio-Djibouti corridor through improvements in the range and quality of logistics services at Modjo Dry Port, and reducing burdensome regulations in customs, trade finance and trade facilitation, the government will be able to reap the benefits of trade that help to drive growth and reduce poverty.” In 2015 the World Bank urged for diversification on infrastructure funding in Ethiopia in a bid to finance its infrastructure projects to avoid heavy reliance on the state. Ethiopia is the fastest growing economy in East Africa posting an annual growth of slightly over 10 percent. The locomotive, to be assembled at the company’s production facility in Koedoespoort, east of Pretoria, marks a crucial step in Transnet’s strategy of becoming a leading manufacturer and supplier of rolling stock on the continent. The 1067 mm gauge diesel locomotive is designed for branch line and shunting use in African conditions. The underframe, bogies, superstructure and control system are designed to withstand the climate, while the axleload is suitable for lightly-laid tracks and the cab is designed for bidirectional operation.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 9

9

19/05/2017 12:34:34


BRIEFS It has an MTU 16V 4000 R43R engine with an output of 2 000 kW.Options envisaged include cab customisation, engine upgrades and a passenger version. “The Trans-Africa Locomotive project has provided an opportunity for Transnet to grow and diversify its business,” said President Jacob Zuma at the unveiling. “Research showed that there was a particular regional demand for a relatively light and efficient locomotive that could ride these tracks, and navigate their twists and turns. It is an African solution for an African problem, specifically developed with African conditions in mind.” The locomotive is ideal for South African branch lines, according to Zuma and also the perfect fit for most of the main lines in the SADC region, where infrastructure prevents the use of heavier locomotives. While Transnet has previously built vehicles for customers in South Africa and elsewhere, it has never had full responsibility for a product from design to assembly. “The locomotive is evidence of the strides we are making in transforming Transnet Engineering into an original equipment manufacturer for locomo-

South African freight company Transnet has unveiled the first locomotive to be manufactured in Africa, the Trans− Africa locomotive. tives, a move designed to restore our position as a catalyst for African innovation, industrialisation and critically, intra-African trade,” said Transnet Group CEO Siyabonga Gama. The Trans-Africa Locomotive is appropriate for aged railway lines that operate on the Cape gauge system, offering a cost-effective solution for the majority of the continent’s railway lines that are currently unused.

Transport firm Barloworld, to offers driving classes to South Africa trucking industry

T

he fully-accredited institution enables the company to develop and hire the skilled drivers the business requires, while also ensuring the continuous development of its existing employees. James McKenzie, executive for human resources at Barloworld Transport, says the shortage of drivers is a huge challenge for the road freight industry. “Out of every 100 drivers who apply for jobs at Barloworld Transport, only about seven initially meet our criteria.”

10

According to McKenzie, an estimated 40% of professional drivers in South Africa are also operating illegally as their professional drivers permits (PrDPs) are either fraudulent or have expired, therefore undermining safety and efficiency in transportation of goods on South African roads. At the academy, employees receive formal recognition for the training they complete in the form of a National Certificate in Professional Driving (NQF3). “Each new driver who joins completes

a three-week professional driving course through the academy – which forms the start of the qualification – and every single one of the 1800 drivers employed with us also takes part in a refresher course every year.” McKenzie says the training its drivers receive through the academy is crucial for the company to manage risks and contribute to safer roads for all road users. It also plays a part in addressing the high levels of unemployment in South Africa, especially among the youth.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 10

19/05/2017 12:34:35


BRIEFS “The academy offers funded learnership programmes for unemployed people. We have 140 unemployed people on various academy programmes at the moment and another 100 unemployed learners are enrolling this month.” He says a lack of experience is also the biggest barrier facing young people who want to become truck drivers. “You need between three and five years of experience to be hired as a professional truck driver, but this makes it very difficult to get hired and gain the experience you need in the first place. The Academy bridges this gap.”Barloworld Transport has partnered with one of the technical high schools in the country where 10 learners have been enrolled into a school-leavers programme. This center caters for the majority of unemployed learnership programmes bringing the much-needed opportunities directly to the community.

In a bid to address skills shortage in South Africa’s trucking industry, freight transport firm Barloworld Transport founded the Barloworld Transport Academy a separate division within the company focusing on niche road transport training.

South African T taxi industry set for major make-over

axis are a key feature on South African roads besides being the main source of transport for millions of passengers daily. The industry has historically been mostly unregulated, making it difficult to monitor.

Recent studies have shown that the taxi industry generates around R90 billion annually. This, however, is only a general estimate due to the difficulty in tracking the industry. The proposed e-ticketing system aims to streamline the payment as well as auditing processes of the industry. The pilot project has already been launched in Johannesburg and, based on its success, is expected to be rolled out across the province, and thereafter, the country. The total rollout is expected to take place over the next five years. The system is owned and will be rolled out by FairPay and TaxiChoice. Santaco is the sole shareholder with Curve Group Holdings acting as the sole technology provider. Ismail Vadi, Gauteng MEC for Roads and Transport, has welcomed the update in the industry. “The standard that must be strived for is ‘One Province, One Ticket’, in line with the national electronic fare collection regulations,” said MEC Vadi. Once the system is put in place, passengers will no longer need to worry about not having the right amount or not receiving change. The industry will work on a top-up card system.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 11

11 19/05/2017 12:34:35


BRIEFS

Benefits of new taxi system implementation: 1

Commuters can top up their cards at kiosks situated at taxi ranks. 2 Kiosks and top-up stations will eventually be available at retail outlets.

3

The card will eventually progress into being a debit card due to it being a fully compliant EMV bank card.

4

The card will eventually allow for reduced fees for

pensioners and persons with disabilities.

5

Taxis are also expected to carry GPS equipment and allow for WIFI to be accessed on the journey.

6 Lack of regulation has

made it tough to track the value and annual earnings from the industry, which according torecent survey, amounts to around R90 billion annually.

Taxi industry in South Africa is set to undergo transformation, moving away from the current outdated cash system which has till now, proven problematic.

$2 billion international cargo airport project launched in Nigeria A $2 billion (N800bn) international cargo airport project has been launched at IfiteUmueri in Anambra state, Nigeria.

12

T

he project is estimated to cost over 2 billion US Dollars The project facilitated by Elite International Investment Holdings Ltd; sits on 1,500 hectares of land with enough elbowroom for expansion from Ivite-Umueri to neighbouring communities such as Nando, Umunya, Otuocha, Aguleri, Nteje, Nsugbe and beyond.

It is expected to generate 1,200 direct and 3600 indirect jobs and we expect the people of the state to grab 70 per cent of the jobs in continua-

tion of our efforts to create wealth and prosperity for our people The governor said that the host community of Umueri would be entitled to 3 per cent of the profit from the project in perpetuity as a part of the standard corporate social responsibility. The state as a compelling investment destination and attracted investments valued at over 5 billion US Dollars. And with this airport city project, the figure now stands at 7.2 billion US Dollars.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 12

19/05/2017 12:34:36


BRIEFS

Qatar Airways to expand cargo operations

Qatar Airways has announced plans to expand its cargo operations, cementing the carrier’s growing aviation ambitions. The airline is already the world’s third largest international cargo airline according to the International Air Transport Association (IATA), and the announced expansion could increase its existing cargo capacity.

G

roup Chief Executive of Qatar Airways, Akbar Al Baker said: “we are going to expand cargo operations. We keep on receiving more freighters and is big requirement for the correct capacity freighters and this is enabling Qatar Airways to grow.” Al Baker made the announcement during the opening ceremony of 12th Airports Council International (ACI) Asia Pacific Regional Assembly Conference and Exhibition yesterday. “We are now the third largest air cargo carrier in the world. We grew very rapidly to the third position and this is because whatever we do in Qatar Airways, we plan it so robustly in order for us to achieve our targets,” he added. This is the first time that ACI is

coming in the Middle East region. “ACI gives us even bigger recognition around the world as one of the top airports and one of the top hub in the world.” Hamad International Airport (HIA) has seen impressive growth in passenger traffic this year, with an expected double digit growth. Apart from air cargo expansion, Qatar is seeking to transform itself into a transportation hub in the region as part of its 2030 National Vision development plan, aimed at diversifying the economy away from hydrocarbons. With this in mind, the state-run Qatar Airways is looking to secure up to one-third of its revenues from cargo (as a long-term objective), which no other Middle Eastern passenger airline has attempted. However, given that cargo operations are usually not the main profit drivers for global airlines, the move is unlikely to deliver a significant boost to company’s revenue in the short-term.

“We are now the third largest air cargo carrier in the world. We grew very rapidly to the third position and this is because whatever we do in Qatar Airways, we plan it so robustly in order for us to achieve our targets”

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 13

13 19/05/2017 12:34:37


PROCUREMENT INSIGHT

Getting a successful Request for Quotation (RFQ)

A Request for Quotation- RFQ is the process of submitting the detailed description of a project need to suppliers, eliciting a quotation early in the procurement process. Suppliers subsequently enter a bidding competition for a product or service.

I

t allows companies to get a customized, comprehensive, side-by-side comparison of what different suppliers can offer. The cost, turnaround rate, and other details requested from the quote will determine how procurement professionals will make decisions from then on. Vendors Know your suppliers, their expertise, their environment, their current status, their adaptability to what you are enquiring, are they best in current scenario fitting to the budget, the area, the resources and the overall deliverables. If the vendors selected are random, you will end up with few responses and then don’t blame stakeholders that they approved only few. You are responsible for high rate of good response of RFQ or Tenders.

14

Specific As a buyer, the most detailed responses to RFQs are usually most appealing. Ask for specific information and a breakdown of the details. Know what you want from a supplier and ask if they can deliver. For example, a buyer should ask the bidder to break down costs for each phase of the project. Define service expectations Be descriptive about your expectations regarding the manufacturing of your product. This may include a description of the vendor’s business processes and quality management. Specify delivery arrangements Delivery is an important detail that needs to be specified. Based on the delivery terms, buyers may have different levels of responsibility from arranging the entire process to only paying

insurance and getting goods delivered directly to the final destination. If cost is an important factor your company’s procurement strategy, delivery costs need to be factored into the equation. Be courteous Only request information that gives value to your decision making process. Since there is a cost for preparing responses to your RFQ, try not to burden suppliers and delay their response by requesting information that is does not benefit their claim. Give the supplier appropriate time to respond: Be realistic. Suppliers need a considerable amount of time to prepare responses in detail that you request. Be cautious of the fact that some information that you request will take longer to acquire. Follow up While the RFQ is underway, you should treat all participants equally. Share the same information with everyone. Questions from any one supplier should be answered and distributed to all participants. It is against business ethics to leak price information or other supplierspecific info to other bidders. Some e-procurement systems have a sealed bids functionality where no one, not even the buyer, can see completed bids. The bidding system will only open after the deadline. Sometimes, if you have not reached your price targets in the first round, you can decide to undergo a second round (a reverse auction) with limited participants. In this case you should give the participants the price target you are hoping to reach.

Ask for specific information and a breakdown of the details. Know what you want from a supplier and ask if they can deliver. Article Courtesy Of: Hariharan Laxminarayan

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 14

19/05/2017 12:34:38


PROCUREMENT INSIGHT

Negotiation Tips -an expert’s advice!

T

o achieve desired results all negotiaters should put the following into consideration: Don’t be afraid to ask for what you want.

1. Successful negotiators are assertive and challenge everything – they know that everything is negotiable. I call this negotiation consciousness. Negotiation consciousness is what makes the difference between negotiators and everybody else on the planet. Being assertive means asking for what you want and refusing to take NO for an answer. Practice expressing your feelings without anxiety or anger. Let people know what you want in a non-threatening way. Practice ‘I’ statements. For example, instead of saying, “You shouldn’t do that,” try substituting, “I don’t feel comfortable when you do that.” Note that there is a difference between being assertive and being aggressive. You are assertive when you take care of your own interests while maintaining respect for the interests of others. When you see to your own interests with a lack of regard for other people’s interests, you are aggressive. Being assertive is part of negotiation consciousness. “Challenge”means not taking things at face value. It means thinking for yourself. You must be able to make up your own mind, as opposed to believing everything you are told. On a practical level, this means you have the right to question the asking price of that new car. It also means you have an obligation to question everything you read in the newspaper or hear on CNN. You cannot negotiate unless you are willing to challenge the validity of the opposing position. 2. Shut up and listen. I am amazed by all the people I meet who can’t stop talking. Negotiators are detectives. They ask probing questions and then shut up. The other negotiator will tell you everything you need to know – all you have to do is listen. Many conflicts can be resolved easily if we learn how to listen. The catch is that listening is the forgotten art. We are so busy making sure that people hear what we have to say that we forget to listen.

You can become an effective listener by allowing the other person to do most of the talking. Follow the 70/30 Rule – listen 70 percent of the time, and talk only 30 percent of the time. Encourage the other negotiator to talk by asking lots of open-ended questions – questions that can’t be answered with a simple “yes” or “no.” 3. Do your homework. This is what detectives do. Gather as much pertinent information prior to your negotiation. What are their needs? What pressures do they feel? What options do they have? Doing your homework is vital to successful negotiation. You can’t make accurate decisions without understanding the other side’s situation. The more information you have about the people with whom you are negotiating, the stronger you will be. People who consistently leave money on the table probably fail to do their homework. 4. Always be willing to walk away. I call this Brodow’s Law. In other words, never negotiate without options. If you depend too much on the positive outcome of a negotiation, you lose your ability to say NO. When you say to yourself, “I will walk if I can’t conclude a deal that is satisfactory,” the other side can tell that you mean business. Your resolve will force them to make concessions. Clients often ask me, “Ed, if you could give me one piece of advice about negotiating, what would it be?” My answer, without hesitation, is: “Always be willing to walk away.” Please note that I am not advising you to walk away, but if you don’t even consider the option of walking away, you may be inclined to cave in to the other side’s demands simply to make a deal. If you are not desperate – if you recognize that you have other options – the other negotiator will sense your inner strength. 5. Don’t be in a hurry. Being patient is very difficult for Americans. We want to get it over with. Anyone who has negotiated in Asia, South America, or the Middle East will tell you that people in those cultures look at time differently than we do in North America and Europe. They know that if you rush, you are more likely to make mistakes and leave money on the table. Whoever is more flexible about time has the

advantage. Your patience can be devastating to the other negotiator if they are in a hurry because they start to believe that you are not under pressure to conclude the deal. So what do they do? They offer concessions as a means of providing you with an incentive to say YES.

Negotiation is a dialogue between two or more people or parties intended to reach a beneficial outcome over one or more issues where a conflict exists with respect to at least one of these issues 6. Aim high and expect the best outcome. Successful negotiators are optimists. If you expect more, you’ll get more. A proven strategy for achieving higher results is opening with an extreme position. Sellers should ask for more than they expect to receive, and buyers should offer less than they are prepared to pay. People who aim higher do better. Your optimism will become a self-fulfilling prophecy. Conversely, if you have low expectations, you will probably wind up with a less satisfying outcome. 7. Focus on the other side’s pressure, not yours. We have a tendency to focus on our own pressure, on the reasons why we need to make a deal. It’s the old story about the grass being greener in the other person’s backyard. If you fall into this trap, you are working against yourself. The other side will appear more powerful. When you focus on your own limitations, you miss the big picture. Instead, successful negotiators ask, “What is the pressure on the other side in this negotiation?” You will feel more powerful when you recognize the reasons for the other side to give in.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 15

15 19/05/2017 12:34:38


REPORTS Negotiation Tips -an expert’s advice! Your negotiation power derives in part from the pressures on the other person. Even if they appear nonchalant, they inevitably have worries and concerns. It’s your job to be a detective and root these out. If you discover that they are under pressure, which they surely are, look for ways to exploit that pressure in order to achieve a better result for yourself. 8. Show the other person how their needs will be met. Successful negotiators always look at the situation from the other side’s perspective. Everyone looks at the world differently, so you are way ahead of the game if you can figure out their perception of the deal. Instead of trying to win the negotiation, seek to understand the other negotiator and show them ways to feel satisfied. My philosophy of negotiation includes the firm belief that one hand washes the other. If you help the other side to feel satisfied, they will be more inclined to help you satisfy your needs. That does not mean you should give in to all their positions. Satisfaction means that their basic interests have been fulfilled, not that their demands have been met. Don’t confuse basic interests with positions/demands: Their position/demand is what they say they want; their basic interest is what they really need to get. 9. Don’t give anything away without getting something in return. Unilateral concessions are selfdefeating. Whenever you give something away, get something in return. Always tie a string: “I’ll do this if you do that.” Otherwise you are inviting the other negotiator to ask you for additional concessions. When you give something away without requiring them to reciprocate, they will feel entitled to your concession, and won’t be satisfied until you give up even more. But if they have to earn your concession, they will derive a greater sense of satisfaction than if they got it for nothing. 10. Don’t take the issues or the other person’s behavior personally. All too often negotiations fail because one or both of the parties get sidetracked by personal issues unrelated to the deal at hand.

16

World Bank to support Africa’s top digital entrepreneurs

A five-month business acceleration program has been launched in Sub-Saharan Africa to support the most promising digital start-ups in the region.

U

nder the World Bank-powered XL Africa, start-ups will receive mentoring from global and local experts, learn through a tailor-made curriculum, increase their regional visibility, and get access to potential corporate partners and investors. The program has garnered support from prominent African investment groups, and will help the 20 selected start-ups attract early stage capital between $250,000 and $1.5 million. Vice President for the Africa Region at the World Bank, Makhtar Diop, says digital start-ups are important drivers of innovation in Africa. “To scale and spread new technologies and services beyond borders, they need an integrated ecosystem that provides access to regional markets and global finance; pan-African initiatives like XL Africa play a critical role by linking local start-ups with corporations and investors across the continent.” The program comes at a time of increasing interest in the African digital sector.

A recent report by Disrupt Africa, in 2016, shows the number of tech startups that secured funding increased by 16.8% compared to 2015. The program’s flagship activity includes a two-week residency in Cape Town, South Africa, where the ventures will have the opportunity to interact with and learn from their mentors, peers, and local partners. The Cape Town residency will conclude with the Venture Showcase, a regional event in which the entrepreneurs will present their business models to a select audience of corporations and investors. XL Africa will collaborate with close to 20 prominent African and global investment groups. Interested companies can apply online on the XL Africa website www. XL-Africa.com by Monday, June 12, 2017. XL Africa is funded by the governments of Finland, Norway, and Sweden, and administered by the World Bank Group with implementation support from IMC Worldwide, VC4A, and Koltai & Co.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 16

19/05/2017 12:34:39


REPORTS

Importing from China to Kenya: An ingredient to small businesses

A

s with any other investment project you may be trying, make sure you have a clear understanding of what you are going to be doing before going into it. Find some good products which can attract demand locally. Examples sanitary wares, plumbing fittings, electrical fittings, tiles, electronics and cheap jewelry. Consult the customs office to make sure the products you are planning to import are acceptable under Kenyan laws. Also, make sure you have an active KRA pin. If you don’t have one visit the KRA website and obtain one. This will help a lot during the custom clearance process once your goods arrive in the country.

the manufacturer’s price with 1.6. The answer will be the total amount you’ll spend and with this figure, you can now predict your profit even before you import the products.

Find good suppliers

Example

Sites such as alibaba.com or aliexpress.com have an excellent database of Chinese Manufacturers. Here you will find many suppliers supplying different product categories. It is however advisable to double check on the credentials of your chosen supplier just to make sure you are getting the right deal. To avoid scams or cases where poor quality products are supplied take the following precautions: Get contacts of one of the Kenyans living in China. These might be helpful in locating the right suppliers and spot checking quality of your products.

Request for product sample

Before you order in bulk, request the supplier to send you a sample of the product. Normally, samples are given out free of charge but you may have to pay for freight charges (about $50 or Ksh4,500).

Know your budget

Since you are importing to re-sell, it is important that before you place the order you get your Maths right. Apart from paying the supplier for the goods, you will be required to pay for freight, clearing, duty fee, inspection fee among other charges. A simple formula for determining how much you’re going to spend on the whole process is to multiply

If you are importing a bunch of watches that cost Ksh50,000 in total all you need to do is to multiply 50,000×1.6=Ksh80,000. So Ksh80,000 is roughly the amount you need to cater for all expenses along the way. If you are satisfied with the cost and quality of the products (assuming you’ve already received your free sample), go ahead and place an order with your chosen supplier.

Identify the Port of Loading

Unlike in Kenya where we only have one main port city, China has many outlets. There is Guangzhou, Tianjin, Qingdao, Shenzhen, Shanghai, Ningbo and Dalian among others. In each port city you will find courier companies which can deliver to Kenya and help you clear with the customs offices. Examples being: • Salihiya Cargo • DHL • EMS Once you have identified your port and potential courier company (and assuming that you have already received the samples and are satisfied with them) you can direct your supplier to drop your goods at your agent’s office in the nearest port city. From that point, you can negotiate with the courier agent on terms of delivery.Collect your goods at the Port If you pay for your goods to be delivered by air, it goes without saying,

you will have to collect them from your nearest international airport. On the other hand if you chose delivery by sea, then you have to collect your products from the port of Mombasa. You will be required to pay custom duties and inspection charges. You can seek the assistance of your clearing and forwarding agent at this juncture to expedite the process of clearing your goods from the port.

Finally

Now that your imported goods have arrived in Kenya, all you need to do is make good use of your entrepreneurial skills. With proper pricing and marketing, the sky is the limit for small business importers who source their goods from China.

DON’TS when importing from China to Kenya

1. Buy in bulk until you have seen the samples and LIKED them 2. Listen to supplier who try to tell you that they can’t ship samples; they might just be trying to scam you 3. Pay with your ATM card. Use PayPal at least for the first 6 months until you fully trust your supplier. 4. Buy counterfeit products. 5. Buy a lot of items on your first order. You can start off buying 1-5 units at a time until you build up the money to re-invest into your inventory. Do you have any experience importing products into the country? Would you like to start importing soon? Share your thoughts via the comment box as we’d also like to hear from you.

Contributor: Malachi Motano

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 17

17 19/05/2017 12:34:39


TECH BUSINESS

New technology to predict spot market prices for individual loadings Hamburg-based start-up an innovative technology that turns the complicated truck business into an easy-to use application

T

he core of the technology is a self-learning artificial neural network (AI) that predicts spot market prices for individual loadings within milliseconds. A dispatcher inserts the basic parameters of a loading, immediately gets an actual market price and can confirm it with a single click. Cargonexx takes over as a responsible contractor and matches the tour automatically within its network of carriers. Over 1,700 carriers have registered within the first four months of operation. More than 100 new transportation companies join the network every week. The service is free of charge because Cargonexx earns a margin between buying and selling a tour. Rolf-Dieter Lafrenz, CEO and cofounder, Cargonexx, said, “Our target group are not the small shippers, but the middle-sized and big freight forwarders. Cargonexx makes their life much easier and cheaper. This is why they want us to grow.” The founders of Cargonexx believe that data intelligence is the future of transportation. The neural network is learning from historic and current freight data and improves its accuracy every day. Soon it will not only be able to predict prices, but also transportation volumes, regional peaks and shortages.

18

Andreas Karanas, second founder, Cargonexx, said, “The spot market is only the first step. With our data intelligence, we will be able to offer many new smart services to shippers, freight forwarders and carriers.” Cargonexx has started its service in Germany, which makes up 25 percent of the European transportation market. Poland, Austria and the Netherlands are next on the list of countries Cargonexx wants to conquer.

“We are the first transportation company with an artificial intelligence technology in Europe and we are willing to extend this competitive advantage as fast as possible,” Lafrenz added

4 ways e-commerce can reduce transaction costs

E

-commerce refers to buying and selling goods and services, and transferring funds digitally. It covers a range of different types of businesses, from consumer based retail sites, through auction or music sites, to business exchanges trading goods and services between corporations. It is currently one of the most important aspects E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. These business transactions occur either as business-to-business, business-to-consumer, consumer-to-consumer or consumer-tobusiness.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 18

19/05/2017 12:34:39


TECH BUSINESS

Here are some of the ways e-commerce can reduce costs

Quantity When offline stores calculate transaction costs, they have to factor in countless business expenditures along with the actual number of transactions. When there are fewer transactions, the cost of per transaction is higher. On the flipside, transactions arriving in high quantity can overwhelm your personnel and distributors. In an e-commerce business, the transaction cost is the same across the board, whether one order or thousands come in.

Accuracy Electronic selling nearly eliminates processing errors that run rampant with human processors. This translates into less wasted time solving order and invoice problems. Although inaccuracies do not incur fees or penalties, they do take up considerable employee time and energy. E-commerce frees up staff members to focus on profit-generating activities.

Inventory The money received for every transaction will pay for the item; it will also contribute to the sales person’s salary, credit card fees, lease on storefront, electricity, telephone, heating/cooing, taxes,displays, repairs and maintenance to the building. However, the money received for an e-commerce transaction pays for the item, web hosting, shopping cart software, distribution and little else. The cost overall of maintaining a virtual store is far less than that of a brick and mortar store.

Brick and Mortar With a brick and mortar store, you will have to maintain an inventory. This will entail purchasing, receiving, unpacking, displaying, storing extras and selling as quickly as possible. In the e-commerce world, you can opt to own or rent warehouse space to store inventory, or you can create a

working relationship with wholesalers or manufacturers that ship directly from their facility, which is often called drop shipping. If purchasing in bulk, your cost per item will be lower, but you will not have to process and house the inventory. An e-commerce business is able to reduce labor and other costs in many areas, including: document preparation, reconciliation, mail preparation, telephone calling, data entry, overtime and supervision expenses.

Other Reduced Costs E-business can help manage operating costs in many areas, thereby reducing the cost of individual transactions. The use of email and electronic invoicing are a tremendous savings over the traditional methods.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 19

19 19/05/2017 12:34:40


COVER STORY

NIC Bank forms a leasing subsidiary

“

Our Writer Malachi Motano digs deep into the subsidia which enables the group to offer customers the asset, their financing solutions as well as insurance through their subsidiary, by engaging the bank Group Managing Director John Gachora in a question (Q) and answer (A) interview

20

Q: Thanks for the golden opportunity. Define leasing to a layman A: A lease is a contract whereby one party, the lessor, grants the right to use a particular good for a period of time to the other party, the lessee (or tenant), which will pay for the transfer of the right to use a fixed amount regularly Q: When did NIC enter the leasing Market? A: The Bank received approvals from the Central Bank of Kenya to set up the subsidiary in December 2014. Q: What model does the bank use? A: The operating model employed by NIC Leasing LLP is unique and a first in the domestic market. The model sees NIC Bank partnering with Mercantile Finance, another wholly owned subsidiary of the bank

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 20

19/05/2017 12:34:40


COVER STORY Q: Who are your target clients? A: Our leasing product is currently available for Small and Medium Size Enterprises (SME’s), Corporates and Government both County and Central Government. With an operating lease, the lessee is allowed to us ean asset over a specific period of time in return for periodic payments based on partial payout of the capital cost of the asset. It does not convey the right of ownership of the asset.

Director John Gachora Q: What was the driving factor for the bank entering the market? A: The move to set up the new subsidiary fits into the Bank’s aggressive growth strategy, especially in the Asset Finance space, which has become very competitive over the last few years. Leasing is gaining traction in the Kenyan market. The leasing initiatives by the Government are a positive move towards growing the market and we are confident that NIC Group is well positioned to support this growing market. Q: Leasing is catching on in Kenya with the Government taking the lead especially in the leasing of motor vehicles and medical equipment. What are the immediate advantages? A: It offers companies various advantages including optimised cash flow management by freeing up capital which can be invested in other areas of the business. To NIC Bank, the subsidiary is mainly looking at assets such as motor vehicles as well as focusing on leasing equipment in the FMCG, Construction and Healthcare sector. Q: How was the situation handled before, and now that the bank has NIC Leasing limited? A: Well, Previously we would link customers with leasing companies and provide the financing. With NIC Leasing we are now able to provide the equipment and the financing all under one roof. Through NIC Leasing we intend to offer professional services to our customers from inception, during the lease and at the end. Q: How did your bank come with the subsidiary, where did you get consultancy from? A: NIC Bank worked with renowned international leasing consultant Sudhir Amembal to set up the subsidiary, and so NIC Leasing LLP was registered in March 2015 and is a partnership between NIC Bank Limited and Mercantile Finance Company Limited.

Q: What are features of your products? A: Our products have no deposit contribution from customer, lease may be offered as a packaged through structuring the lease with maintenance and insurance thus one predetermined rental (Wet Lease), execution of one Master Rental Agreement from the onset to cater for lease of various asset categories under one contract, leases can be multi-currency based on your income streams and flexible end of term options for example, either renewal of the lease, return of the asset with no further obligations or sale of the same to third parties Q: What are your asset classes? A: The include motor vehicles like saloon , trucks, school buses, IT equipment ranging from computers, servers, laptops, pabx systems, point of sale terminals, supermarket equipment ranging from shelves, coolers, chillers, checkout counters, trolleys, construction equipment like graders, rollers, earth movers, furniture, fixtures and fittings, medical equipment like CT Scan and industrial equipment like air conditioners, generators

Q: What benefits does you leasing come with? A: No large initial capital required either for deposit contribution or outright purchase, no risks of obsolescence as you only pay for usage of the asset, flexibility in lease structuring where maintenance and insurance packaged as part of the lease thus one predetermined payment, Cash flow management as predetermined rentals established in advance mainly payable on quarterly basis, full lease rental is an operating expense thus providing a tax shield for the full lease duration and allows flexibility at the end of the lease term such as extension on the lease or replacement of old assets for new Q: Some more benefits towards conclusion? A. There is No involvement in disposal of the asset at the end of the lease term, VAT on the asset leased is spread over the lease term of the asset and can be offset against input VAT, rental payments are not based on 100% cost of the asset. This means that the lessee pays for a portion of the capital cost based on the period the asset is in use and doesn’t pay for the estimated value of the asset assessed at the end of the lease term and for technological upgrades, leases allow a much faster mode of change through return and upgrade of the assets leased Financial ratio benefits as assets are off balance sheet thus improving ratios such as return on capital and current ratios and there is also no large asset registers required as assets not owned Q: In conclusion, what are the requirements for NIC leasing limited in case someone is interested? A: Last 2 years audited accounts, latest management accounts if last audited accounts are more than 6 months old, 6 months bank statements from all your active accounts, copy of certificate of incorporation, company pin and memarts, all directors pin and id’s, comprehensive company profile with details about company, branch networks, key management staff, aged debtors and creditors listing for the last 6 months and application letter indicating nature of assets to be leased, duration of lease, and expected action at the end of the lease Q: Your parting short? A: Processing time is only seven workings days

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 21

21 19/05/2017 12:34:40


COVER STORY

Technical Aspects of a Leased Asset 2017

Why Businesses Lease and Finance Equipment The infographic showcases a variety of ways businesses can use equipment finance to their strategic advatage, including: Majority of businesses around the world today lease or finance their equiment, US-based Equipment Leasing and Finance Association released a new infographic highlighting why this method of equipment acquisition is so popular. The “8 reasons to finance equipment for your business” explains some of the key benefits businesses enjoy when they lease or finance the equipment they need to operate and grow. • •

T

his one day seminar will discuss the growing role of aircraft and engine leasing to worldwide airline’s fleets with an in-depth look at the maintenance issues and trends in technical aspects of aircraft leases. It will provide a practical look at the difficulties and challenges of maintenance issues including how to estimate the right reserve rates for airframes, engines, property defining “Overhaul”, “Shop Visit” The seminar will encourage interactive debate and will include the various perspectives of those key personnel involved in the industry who have an indepth hands-on knowledge and experience to enable the participant to gain a better grasp of the technical issues of a lease agreement. The seminar takes place on May 15, 2017 at NH Berlin Friedrichstrasse, Berlin, Germany.

22

• • • • • •

Finance 100% - Arrange 100% financing of your equipment, software and services with 0% down payment. Save cash - Save your limited cash for other areas of your business, such as expansion, improvements, marketing or R&D. Keep up-to-date - Keep up-to-date with technology by acquiring more and better equipment than you could if the financing option were not available. Outsource asset management - Let your equipment financing company manage your equipment from delivery to disposal. Accelerate ROI - Rather than paying one lump sum for your equipment, make smaller payments while the equipment generates revenue. Customize your terms - Set customized payments to match your cash flow and even seasonal income fluctuations. Benefit from bundling - Bundle the equipment, installation, maintenance and more into a single, easy-tomanage solution. Hedge against inflation - Lock in rates when you sign your lease to avoid inflation in the future.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 22

19/05/2017 12:34:41


s

o highly

s of our

wels can

ur smart

Pty) Ltd

ments in

sgrohe’s

eniently

r longer

ect is a

his area.

oncealed

nvenient

is based

he water

ton, and

n easily

type, all

ds that

and the

se great

k to the

nction.” cutting

robi and

Kenya.

m the

tach in

y, it has

hnology,

.

May 2016

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 23

23 19/05/2017 12:34:42


BRIEFS EVENTS

Africa’s Oil & Gas industry experts prepare for the 16th Africa Independents Forum in London

24TH - 25TH MAY 2017 The Waldorf Hilton, London

A

frica’s Oil and Gas industry experts are preparing for the leading event on the international Oil and Gas calendar, the 16th Africa Independents Forum, which will take place on 24th and 25th May in London. The event brings together all stakeholders in Africa’s upstream oil and gas to review the state of the industry and exchange ideas on game-changing opportunities for the future. Showcasing Africa’s premier projects and upstream operators, the forum provides plenty of scope for corporate independents, international oil, gas and energy companies and Government officials to network, present their projects, propose new ventures and firm up partnerships and investment deals.

24

The two-day programme is designed around the theme “Shaping the Continent’s Future in Upstream Oil & Gas.” In-depth presentations provide a framework for exploring solutions that move beyond survival tactics to establish best practices that better equip the industry to weather uncertainties and withstand shocks whilst maintaining optimum performance. The forum will kick off with keynote speaker David Fassom, Director of Stellar Energy Advisors Ltd in London, delivering an overview of Africa’s Oil & Gas affairs. Broken down into six sessions, the subjects explored during the two days will cover crucial aspects of the industry and current and future challenges such as exploration, development and production, oil and gas assets in emerging, undervalued Sub-Saharan

Africa and untapped potential in Africa, E&P strategy and corporate investment, finance, risk and contracts. During the two days, delegates will benefit from invaluable insights from senior-level international speakers involved in Africa’s upstream industry. These include James Phillips, President & CEO, Africa Energy Corp, Cape Town; Maggy Shino, Petroleum Commissioner, Ministry of Mines & Energy, Namibia; Carlos Zacarias, Chairman, Instituto Nacional de Petroleo, Moçambique; and Jim Baban, Managing Director, Heritage Oil, St. Helier, amongst others. During Session Five, on Day 2, Anthony Gilby, CEO & Managing Director of Brisbane’s Tlou Energy, will present the company’s gas development projects. “We believe that Tlou is extremely well-positioned to progress with plans for the Lesedi gas-to-power project to achieve first power in 2019, after receiving a request for proposal from the Botswana government to deliver 100MW of power, plus having Independent Power Corporation signed as a development partner.” An “Outlook for Independents across Sub-Saharan Africa” will be presented by Gail Anderson, Research Director at Wood Mackenzie, renowned resources sector consultancy. Jasper Peijs, VP of Exploration Africa at BP, will address members of the PetroAfricanus Club – Africa’s oldest established network – at the 79th PetroAfricanus dinner, hosted by ITE at The Waldorf Hilton after the close of the first day of the forum. Sandy Stash, Group VP for Safety, Sustainability and External Affairs at London’s Tullow Oil, is the guest speaker at the 8th Global Women Petroleum & Energy Club Luncheon, designed to connect women in oil, gas and energy. Also at the Waldorf, it is co-hosted by ITE and Frontier Communications. The 16th Africa Independents Forum also offers exhibition and sponsorship opportunities for companies looking to promote their services to a senior level audience.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 24

19/05/2017 12:34:42


EVENTS

Upstream Oil and Gas Awards premieres in Nairobi -5th May 17

O

il and Gas industry experts in Kenya will convene in Nairobi in May to launch the new Upstream Oil and Gas Awards, a prestigious celebration of achievement and excellence in the nascent industry. The Upstream Oil and Gas Awards aims to recognize and celebrate outstanding achievements from within the emerging upstream oil and gas industry in the country. The awards highlight exceptional achievement across all key areas within the upstream oil and gas value chain. It is open to individuals and companies operating in the country. The high profile Awards ceremony launches at the Windsor Golf Hotel & Country Club, Nairobi on 5th May, 2017 and is expected to attract an exceptional list of guests to gather, support and celebrate excellence in the emerging upstream oil and gas industry. Renowned brands such as Shell, Galana Oil, Chandaria Industries, PetroVision, Weatherford, Schlumberger, National Oilwell Varco, Citibank, DT Dobie’s Volkswagen, Spedag Interfreight, Safaricom Business, Rwanda Air, Anjarwalla & Khanna, Extractive Baraza, Glenmorangie and Hennessy are among the companies attending the event. Organized by the Upstream Magazine, the event will feature discussions and a fun networking golf tournament before the awards gala. Thisremarkable event is the start of a long culture that will recognize the incredible talent of incredible people through a judging process that is open and transparent and carried out by well known people that are hugely respected in their own fields. Dennis Keiser, General Manager of Spedag Interfreight, said “We’re delighted to sponsor and be a partner of The Upstream Oil and Gas Awards. These awards recognize what can be achieved with hard work, commitment and determination. At Spedag Interfreight, we share these values and our sponsorship of these awards is show of our commitment to promoting excellence in the upstream oil and gas industry.” This event also gives the oil and gas industry an opportunity to share and learn from one another, while honouring and recognising the important people who play their part in continually improving safety performance in the industry. It will be held annually in the very first week of May.

Tanzania to host first Global Logistics Summit

T

anzania will host the inaugural Global Logistics Summit in August this year in Dar es Salaam as it seeks ways to impart knowledge on global freight forwarding industry and best practices. The event will take place on August 23 -26 at Julius Nyerere International Conference Centre and will gather over 300 delegates ranging from country Ambassadors, International Representatives, Government officials, Business and Sector Delegates plus Trade Representatives from Africa and the Middle East regions. Tanzania Freight Forwarders Association (TAFFA) president, Mr Stephen Ngatunga said “At TAFFA, we are making strides in empowering businesses through this programme wherein renowned professors from Harvard University, among many others, will address key industry issues.” He further noted that the president of the International Federation of Freight Forwarders Associations (FIATA), Mr Stanley Lim and other federation dignitaries and country representatives would attend, as well as manage, the programme wholly focused on freight forwarding and trade issues in Africa and Middle East regions. Dubbed, “Harnessing Logistics for Sustainable Economic Growth”, the conference comes at a time when there is huge potential in increasing trade volumes into Africa and Tanzania in particular. “Tanzania is “an ideal freight transport hub” tailor-made to creating business networking among participants, even as it advertises it’s own tourist attractions.” “This Summit comes at a time when Tanzanian businesses need to increase awareness and knowledge on best practices to use especially in a digitally inclusive world where technology is king,” said Ngatunga, adding: “There are opportunities for business growth to be unlocked in Tanzania in terms of clearing and freight forwarding especially if landlocked countries like Burundi, DRC, Rwanda and Uganda plus Southern African countries utilize Dar es Salaam through Northern route and vice versa as a freight cargo transportation hub. “For his part, the Assistant Director for Railway Transport Services in the Ministry of Works, Transport and Communications, Mr Festo Mwayika, commented that the government was well pleased to facilitate the Summit, following its enormous advantages to the country. “The most important advantage is using the opportunity to continue ‘showcasing’ to the world that Tanzania remains an ideal gateway for regional trade,” he commented. With an exclusive audience and highest quality agenda yet, you can’t afford missing the chance of a lifetime to interact with some of the biggest players and stakeholders in Freight forwarding business. GLS – Tanzania 2017 will be perfectly timed to provide the insights you need in the freight forwarding sector which has forward linkages to almost all sectors in thriving developing economy and will hence enable you to operate profitably and effectively.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 25

25 19/05/2017 12:34:42


BRIEFS TRANSPORT AND LOGISTICS

From MGR,SGR now set to revolutionize cargo and passenger transport in Kenya Over the last three years Kenya’s infrastructure focus has dwelt predominantly on the construction of Standard Gauge railway (SGR) which will revolutionize both cargo and passenger transport. The first phase which is the largest infrastructure project under vision 2030, is awaiting commissioning in June 1, 2017, necessitating a shift in conversations around the project.

T

he projects which is being constructed by Kenya Railway and supervised by the ministry of Transport, infrastructure, housing and urban development, has been touted as an important transformational project for railway and the entire transport sector in the region. Operations on the line lead to unlocking of the transport grid look that has seen demand for transport outdo the existing rail and road network capacity in the country by far and the cost of production rise to unmanageable levels During its construction phase, the SGR project has driven economic and social development in Kenya, in line with the key objectives of Vision 2030, underlining its pre-eminence as a Vision 2030 flagship project. The projects construction phase has so far yielded an estimated 25,000 jobs for works on the Mombasa-Nairobi stretch, making SGR one of the biggest employers in Kenya outside the Government. Local companies have also been able to reap big from SGR local content inclusion which has seen Kenyan suppliers plug in at different levels of the project such as: provision of transport

26

for the employees to the various project sites along the line; subcontracting of civil works; equipment leases; and security. This has gone a long way in ensuring compliance with local content laws, which stipulate that at least 40% of Inputs utilized on the project should be sourced locally translating to approximately 130.8 billion Moreover, a considerable number of Kenyans have benefited from skills transfer in specialized fields such us engineering and production. This has not only enriched the skill set of individual Kenyan, but also substantially improved the quality of human capital in Kenya to globally competitive levels. The Kenya Railways has already began building the capacity of locals to operate the SGR with over 100 railway technicians already trained in management of various components of operating the Standard Gauge Railway line at the Railways Training Institute. Last year, 114 students were un-

dergoing training at the Institute and this year’s intake was targeting 420 students. The Institute is also set to be upgraded with the government set to invest over 2 billion shillings in the modernization of the Institute. RTI is just but one of the avenues being used as a critical tool for technology transfer. With SGR Phase 1 now drawing to completion, there is no doubt that it will be finalized within scheduled time. Kenya is now transitioning into a new chapter of its growth trajectory, a chapter that will be increasingly characterized by the powerful role that the SGR line will play in shaping positive economic outcomes. Manufacturers will, for instance, be able to reduce the cost of sourcing inputs, lowering the overall cost of doing business and allowing them to remain competitive in both the domestic and regional market. The expeditious implementation of SGR is therefore a positive development for manufacturers and the broader business community. The SGR is designed to carry 22 million tonnes of cargo annually or a projected 40% of Mombasa Port throughput by 2035. This will reduce congestion at the port of Mombasa, positioning it as the preferred port of choice in the region. Along the same lines, the SGR line is also expected to immensely supplement road transport, thereby reducing congestion as well as the cost of road maintenance caused by wear and tear. Fewer trucks on the road also reduce carbon emissions, allowing the country to play a proactive role in mitigating against growing global challenge of climate change The SGR is also expected to significantly out the cost of rail transport in Kenya. It is projected that the SGR will slash the cost of rail transport by a staggering 75 per cent from $0.80 a tonne to $0.20 tonne. The implications for businesses in import and export are profoundly immense. The SGR will therefore burnish Kenya’s already glimmering profile as a regional trade hub, providing necessary impetus for sustainable GDP growth.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 26

19/05/2017 12:34:43


PROCUREMENT LOGISTICS July - August, 2016 Issue No.: 04/2016

&

Eastern Africa Premier Supply Chain Magazine KSHS. 400.00 TSHS. 8,000.00 USHS. 12,000.00 USD. 5.00

Management

Kenya: East Africa Logistics Outperformer

26

PROCUREMENT & LOGISTICS MANAGEMENT

Harnessing supplier insight to spot crises and opportunities

30

Six in Ten Digital Adverts are not seen by Humans

52

1-year (6 issues)

How to Manage Your Fleet Management Company

Kshs 2,400/-

/ORGANIZATION

MPESA Paybill: Buy Goods, 492161

Made payable to Proc & Logistix Consult

Proc & Logistix Consult P.O. BOX 40619 00100 GPO, Nairobi-Kenya. Mobile + 254713727860 / Tel +254 0204404488/02044002479 subscription@procurementandlogisticsonline.com / www.procurementandlogisticsonline.com PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 27

27 19/05/2017 12:34:43


BRIEFS TRANSPORT AND LOGISTICS

Road tolling gains momentum in East Africa, as Uganda introduces tolls onexpressways The drive towards road tolling in East Africa is gaining momentum as the region’s countries expand highway networks. Uganda appears to have broken ranks with its neighbours to make huge strides in achieving progress with this innovative road financing plan - Sandra Dinga writes.

Uganda becomes the second country in the region after Kenya to announce the start of this innovative plan which is part of its revenue-generating measure.

T

he country’s roads agency, Uganda National Roads Authority (Unra) has unveiled concrete steps on how to implement road tolling, operate and maintain modern road networks. Uganda relies mainly on East Africa’s Northern Corridor for its export/import transport needs. It has completed a comprehensive feasibility study for the 77km Kampala-Jinja Expressway, which could be the region’s first truly tolled road by 2022. Unra head of design, Patrick Muleme said: “We are looking at sustainability. We want to maintain the level of service (on the roads) from day one to the last day.”

28

“The toll is determined based on the cost of construction and cost of maintenance and rehabilitation. But if we find that the cost is high for the people, we go further and determine what the users are willing to pay, and based on that, we determine what is optimal,”

The idea of road tolling came up during a recent public consultative meeting for the Kampala-Bombo expressway. Muleme said this system will kick off as soon as each road is complete, although many issues are yet to be resolved, which include who manages the roads, who collects the tolls and how much the tolls ought to be. The tolling will be done based on two methods: open and closed tolling. In open tolling, road users pay a defined amount of money at the start of the road while in closed tolling, road users pay at the end of the road, where the fee is determined according to the distance covered. “The toll is determined based on the cost of construction and cost of maintenance and rehabilitation. But if we find that the cost is high for the people, we go further and determine what the users are willing to pay, and based on that, we determine what is optimal,” Muleme said. Some of the roads that the authority intends to toll include the Kampala – Mpigi expressway, Kampala-Bombo expressway, Kampala outer beltway, Kampala-Entebbe expressway, Kampala Southern bypass and Kampala – Jinja expressway. The money collected from these tolls will be used to maintain the roads. If this initiative comes through, Uganda will be the first East African country to undertake road tolling. Kenya embarked on such a measure but little has been achieved on the side of policy formulation, project structuring and reviewing the existing road act to pave the way for privatisation of certain routes. The country made a false start with road tolling when it terminated the planned concessioning of six sections under the Nairobi Urban Toll Road Concession in 2010 after the World Bank withdrew financing. Kenya however, says it has picked transaction advisors to assist it with the privatisation of the roads that are to be tolled.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 28

19/05/2017 12:34:44


BRIEFS TRANSPORT AND LOGISTICS

Understanding the value of IoT connectivity in private and public transportation

T

he internet of things (IoT) is expected to become a $1.46 trillion industry by 2020. This innovation will have a positive influence across all sectors of business, including public transport, security and in the provision of public healthcare. According to the United Nations, as much as 66 per cent of the global population is expected to live in urban areas by 2050. This means that cities will face many challenges, mostly centred around having to leverage limited resources to deal with a growing influx of people needing services. Public transport is one of the many sectors that will experience strain because of high traffic volumes which can lead to increased road fatalities. But the Internet of Things (IoT) is looking to change all that through the use of smart devices, providing a more citizen-centric business model for service delivery. A recent study indicates that 152,000 smart devices are being used every minute globally, pointing to a future where the success of cities will be heavily determined by the level of smart and innovative technologies they use. Connected cars, buses, trains, and even planes will allow people to have a stable Internet connection at almost all times, alleviating problems such as traffic congestion, safety and shortages of resources. And the transformation won’t stop there, as the IoT will make transportation itself more efficient and help us get from place to place more quickly. Smart traffic and IoT are critical for cities to operate more efficiently with better-managed traffic flow and open lines of engagement between cities and citizens. This innovation offers the potential of a much safer and inclusive community with the amplified use of digital devices. In this age of innovation, cities are urged to think differently, have a clear vision of the city’s future and a

digital transformation roadmap to get there. IoT, like other innovative technologies, presents cities such as Nanjing, China, with exciting fresh methodologies and real-time insights on finding new ways to connect, manage their operations better and provide real value to citizens. Paris, in 2011, launched an electriccar sharing program called Autolib that uses sensors inside the connected vehicles to track them by GPS. And drivers can use the car’s dashboard to reserve public parking spaces in the city. Programs such as this make use of connected vehicles to gather valuable data on how drivers operate their cars and where they travel and smart cities use this data to better plan their roads. Connected cars are all well and good, but what about the millions of people who commute on buses and trains each day, or fly frequently on airplanes? The IoT has them covered, as well. Major players in this space have already started to understand the value of IoT connectivity. Sensors inside of planes, for example, help maintenance workers more easily secure the aircraft and make sure that the planes comply with required aviation guidelines. And multiple plane, train, and bus companies have started making Wi-Fi available in their vehicles in order to enhance the customer experience. Cities also need to capitalise on innovation opportunities by identifying solutions and planning better for natural disasters and emergencies.

Paris, in 2011, launched an electric-car sharing program called Autolib that uses sensors inside the connected vehicles to track them by GPS. And drivers can use the car’s dashboard to reserve public parking spaces in the city.

IOT

• people (both drivers and passengers); • vehicles; and • road infrastructure.

Connectivity and data analytics will play an increasingly critical role in helping cities and governments to provide more efficient and effective healthcare, transport and security services, using real-time technology platforms such as SAP S4/HANA. There are three key factors contributing to a smart traffic city namely: Innovation is transforming how these key factors could operate harmoniously. For example, organisations such as Keifuku Bus Company in Japan provide services and solutions that are putting people first using the SAP connected transport safety technology, which allows for data sharing amongst most major cities that are installed with traffic light sensor technologies to ensure a smooth flow of traffic. Innovation helps city managers make decisions for traffic planning and policies fast. In most African countries however, road traffic data availability is not integrated, as it is collected from multiple sources which make the quality of data unreliable. According to the Road Traffic Management Corporation of South Africa, having a quality comprehensive traffic management system is vital for accurate data collection, analysis and reporting across all factors including human casualties and related costs. Leveraging technology will present cities, transport authorities with innovative ways of how to improve road safety, provide sustainable, efficient public transport, manage traffic flows and speed up response time to the inevitable challenges of rapid urbanization.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 29

29 19/05/2017 12:34:44


BRIEFS TRANSPORT AND LOGISTICS

Maersk betting on Microsoft’s Azure cloud services to fuel digital transformation

G

lobal transport and logistics powerhouse group has joined forces with Microsoft Corp. in a strategic move to revolutionize supply-chain management and global trade. From its connected vessels to its transportation economics, the company is betting on Microsoft to fuel growth and power logistics globally. This agreement means that: Microsoft has been selected as the preferred cloud partner for Maersk’s digital transformation journey, supporting its high-value assets such as carrier performance, equipment utilization and supplier performance. Microsoft Azure is the digital platform of record to power Maersk’s app store and help fuel business model innovations. Microsoft’s intelligent cloud will be used to enhance operational performance, increase the visibility and predictability of supply chains, and improve service to millions of Maersk customers worldwide. In total, Maersk estimates that the power of data will help save tens of millions of dollars to the bottom line annually. “Our aim is to simplify and enhance visibility in supply chains by providing a seamless end-to-end digital experience for our customers,” said Ibrahim Gokcen, chief digital officer, Maersk. “Microsoft Azure is the cornerstone in our digital strategy, providing one common platform shared by all our transport and logistics businesses. On Azure, we are also creating a marketplace of apps and digital products that improve operations and drive better business decisions.” Maersk is the largest transport and Logistics Company in the world with offices in 130 countries and a fleet of more than 1,000 vessels. The company’s container carrier, Maersk Line, sails in all major trade lanes, transporting more than 17 million containers annually, and its terminal operating unit, APM Terminals, is operating in more than 70 ports worldwide. Delays in manufacturing, bad weather, terminal bottlenecks and

30

other incidents routinely cause disruptions to global supply chains. The ability to anticipate, make timely decisions and take swift action is critical when millions of dollars are on the line and unforeseen events impact shipments and business productivity. Maersk has big plans to leverage digital solutions to revolutionize the way it operates its assets, some of which are already underway. Today every ship is tracked by GPS and connected to shore by satellite communications. Using data generated from flow meters, control and alarm systems, sensors, and time stamps, Maersk can analyze and improve fuel efficiency, reduce port stays and provide better network designs. Maersk Line has also harnessed data to effectively lower emissions per transported container by 42 percent between 2007 and 2016. Damco, Maersk’s business unit for supply-chain solutions, recently launched several digital supply-chain solutions built on Microsoft Azure. The next app to be launched is a digital app for Customs House Brokerage. The preparation of documents to clear goods is an increasingly important part of the supply chain. Damco’s solution provides customers with outstanding visibility as well as the ability to manage the clearing of goods by exception. The app combines big data from both internal and external sources, which increases the capability for analytics including exception management

and predictive analytics. All this plus a top-notch user experience makes it a true differentiator in the industry. Data is a key resource in supplychain management tasks such as forecasting, planning and tracking customer deliveries. The sheer volume of data Maersk generates presents an enormous opportunity, and one that is largely untapped. With the power of the Microsoft Cloud, Maersk is turning on the data spigot to provide actionable insights for tactical and strategic decision-making and operational efficiencies, as well as to create new lines of business and revenue streams. “The future of Maersk is very exciting. As a forward-thinking company, it is digitally transforming its massive logistics network to bring even greater value to its customers,” said Judson Althoff, executive vice president, Worldwide Commercial Business, Microsoft. “We are tremendously honored that Maersk has selected Microsoft as its preferred cloud partner for its most critical systems and applications.” Leveraging Microsoft technologies and advanced analytics, Maersk will integrate container logistics across the value chain to provide reliable, efficient services by increasing the performance of its assets. By providing increased visibility and new products and services, Maersk will increase the predictability of customers’ supply chains to drive cost leadership, and enhanced customer experience and business model innovation. Maersk is also building a digital platform (app store) to turn operational and commercial data into software solutions powered by advanced analytics for its Transport & Logistics division and its customers. “Eventually Maersk’s vessels and containers and other assets will be generating terabytes of data on operations and activities in real time, and machines and people will be talking to each other, learning things about our operations and our customers that we can’t even imagine now — and they’ll be available as products, for download,” Gokcen said.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 30

19/05/2017 12:34:44


REPORTS

Kenya could still achieve the SGR Target just by upgrading MGR at only KSh 20bn Standard gauge railway (SGR) project poses fundamental questions even as phase one await commissioning. What is it? Do we need it? Is the value justified? Are we getting value for our money? Is it another mega scandal in the making? Is it self-sustaining? Joshua Odongo Onono – the director of Dench Consultants and was also the running mate for presidential candidate Abduba Dida during the 2013 general elections shares his view with our Writer Daniel Edwards

U

nderstanding Standard Gauge Railway SGR is a railway line with an inward physical distance of 1,433 mm between two rails. Majority of countries in western and central Europe have this type of track. In Japan for instance, it is used for high speed passenger transport. What we have today is known as a meter gauge railways system. It is a track that has physical distance of 1,000 mm from the inside of one rail to the next. This type of railway line is used in many East African countries as well as Chile, Vietnam just to name but few. However, the Tazara railway line- that connects Tanzania and Zambia is different with a track gauge of 1,067 mm also known as cape gauge.

The roots of SGR

SGR is not modern in fact the government is not write when it says this is a modern system of transportation. No, it’s not. The notion is misguided since SGR was a 19th century idea. Legislation for its implementation in America was passed by congress in 1864.

Choice and relevance

According to the Kenyan government, there were two principle reasons behind this choice thus better connectivity with other East African countries and realisation of need for speed in transport. Let’s expound on the first reason.

The justification was that once SGR is complete, there will be no need to transfer cargo from one train to another. However, Kenya already has the meter gauge and adopting SGR is against logic because East Africa already has a meter gauge railway network On the second reason, high speed services are not on Kenya’s list of top priorities. The country’s primary objective is to move cargo off the road and onto the railway line to reduce accidents on road, reduce traffic and subsequently reduce the cost of maintenance of roads. I stand to be corrected. It is also important to note that there is little benefit in running freight trains at speeds of about 60-80 km/h reliably. Globally, no country does that since freight tends to have a low value for time. The potential for a wider gauge is for speed, relevant to passenger services but opposed to freight which is surrounded by dynamism of its purpose. Speed is attained only through electric trains yet SGR will have diesel engines. Electric trains need 1,700 Mw of electricity as opposed to the national cumulative power of 1,600 MW that Kenya produces and once we use diesel engines we lose the potential for speed. KSh 4,500. For Nairobi-Mombasa Trip the financial implication of this project saw the initial proposals by the Chinese pose a fare of 4,500 from Nairobi to Mombasa which is enough for a plane ticket. This was revised downwards to KSh 800, a figure that discredits the reported cost of SGR. Why not just upgrade the existing railway network? This is a question that looms over the government till today. The existing railway network is in a very poor state and cost of upgrading it to SGR level is KSh 327 billion. A section of the local media reports that “Kenya will cover only 10 per cent of this cost with Chinese Export-Import Bank financing 90 per cent of the project.”

Case studies from the rest of the world

A case study in Brazil shows that a meter gauge track built to heavy duty standard performs just as good as a standard gauge railway. The research proves takes me to the performance parameters that guided the Kenyan government into opting for SGR. The performance parameters include a railway track that can move cargo at 80 km/h. In terms of weight, the track is expected to carry 25 tonne axle as this was the main problem on our roads. Some trucks have five axles each carrying 18 tonnes and that eventually destroys our roads hence high maintenance costs. It is important to note that these proposed guidelines could equally be achieved by upgrading the existing railway system. Brazil uses an upgraded meter gauge railway which results in transportation of above 100 million tonnes a year. The 1.5% levy on cargo has raised 15 billion in two years, it means that we could get to the parameters we wanted without borrowing any money if we chose to upgrade the existing meter gauge railway system. So Far improving the current meter gauge system would only cost KSh 20 billion, a far cheaper option than SGR. This project alone has drastically increased our debt by 25%.

This raises the fundamental questions that most Kenyans might be asking: 1. Why did the government have to borrow money? 2. Where is the economic rationale for the SGR? 3. Why did the parliamentary committee give a go-ahead for the project? 4. Why did the public procurement oversight authority approve the project without proper investigations and justifications? 5. Why did the media go silent on such serious looting bound project? 6. Why did the opposition go mum on the same? 7. Were they compromised? 8. Why the contractors were made the consultants and in turn prepared the Bill of quantities (BQ)?

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 31

31 19/05/2017 12:34:44


REPORTS

Kenya’s economy expanded marginally to 5.8 percent in 2016 -KNBS The overall expenditure on roads is expected to increase by 38.3 per cent from KSh 113.2 billion in 2015/16 to KSh 156.5 billion in 2016/17, a survey by the national bureau of statistics (KNBS) indicates

T

he 2017 economic survey also indicates that during the same period, total development expenditure will also grow by 31.7 per cent from KSh 87.8 billion to KSh 115.6 billion, development expenditure on trunk and primary roads to grow by 36.2 per cent from KSh 51.6 billion to KSh 70.3 billion The construction industry grew by 9.2 per cent 2016 from an expansion of 13.9 per cent registered in 2015. Increased activity in the construction of roads and development of housing also translated to an increase in employment in the sector from 148.6 thousand jobs in 2015 to 163.0 thousand jobs in 2016. Construction of Phase I of the Standard Gauge Railway (SGR) was at the final stages of completion as at the end of 2016. The disbursement of funds from the Roads Maintenance Levy Fund (RMLF) by Kenya Roads. Board (KRB) to various road agencies and county governments is anticipated to increase significantly to KSh 40.9 billion in 2016/17 from KSh 25.4 billion in 2015/16. National Housing Corporation (NHC), the government agency for housing, undertook. Several housing activities in 2016, at a total cost KSh 877.9 million. The value of reported new buildings completed in Nairobi registered a growth of 7.6 per cent to KSh 76.2 billion in 2016. The value of reported building plans approved in Nairobi increased by 43.3 per cent from KSh 215.2 billion in 2015 to KSh 308.4 billion in 2016. The index of government expenditure on roads increased from 350.3 in 2015 to 461.0 in 2016 following an increase in road construction projects. Consumption of cement, a major input inThe construction industry generally recorded a 9.7 percent growth in the period under review compared to a 13.9 percent growth registered in 2015.

32

Despite the tough economic environment which has seen major sectors record subdued growth, Kenya’s economy grows marginally to 5.6pc The slow growth led to fewer jobs created in 2016 at 832,900 compared to 841,600 in 2015, with nearly 750,000 (90 percent) of new jobs created in the informal sector. According to the Survey, tourism was the best performer as international arrivals went up by 13.5 percent to 1.34 million in 2016 from 1.18million in 2015.Revenue from the sector went up by 17.8 percent to Sh99.7 billion from Sh84.6 billion in 2015. Information Communication and Technology was also a major driver of the economy growing at 9.7 percent in 2016 compared to 7.4 percent growth in 2015. The value of the ICT output in the period under review went up by 11.1 percent to Sh311.1 million in 2016 from Sh280 million in 2015. Meanwhile, Mobile subscription improved by 85.6 percent from 85.4 percent in 2015. The value of mobile money transactions hit Sh3.4 trillion in 2016 from Sh2.8 trillion in 2015.Other sectors that recorded growth includes real estate as well as transport and storage. However, key sectors regarded as the backbone of the economy recorded slow growth.

The disbursement of funds from the Roads Maintenance Levy Fund (RMLF) by Kenya Roads. Board (KRB) to various road agencies and county governments is anticipated to increase significantly to KSh 40.9 billion in 2016/17 from KSh 25.4 billion in 2015/16.

Agriculture contracted by 1.5 percent in 2016 compared to a growth of 5.5 percent in 2015 despite a rise in Tea and Coffee production by 18 percent and 10.8 percent respectively. The sector was hampered by drought in the fourth quarter of 2016. Manufacturing recorded a 3.5 percent growth in the period under review which is a decline compared to 3.6 percent growth in 2015 even as sales from export processing growth recorded a 5.8 percent increase to Sh68.7 billion. The financial sector also recorded a decline growing by 6.9 percent in 2016 compared to 9.4 percent growth in 2015 amidst the amendment of the banking act that introduced capping of interest rates on loans in the fourth quarter of 2016. Import bill went down by 9.2percent to Sh1.4trillion in 2016 from Sh1.6 trillion in 2015 attributable to a decline in global oil prices in 2016 as total import bill on petroleum products declined by 12.6 percent to Sh197.5 billion. Export earnings also declined marginally to Sh578.1 billion in 2016 from Sh581 billion in 2015. Going forward in 2017, the agricultural sector is expected to be hard hit as drought continues to bite in the first and second quarter of 2017. Other factors likely to affect the economy include the continued deceleration in growth of credit to the private sector that has stabilized at 4 percent owing to the interest Rate capping. Also, international oil prices are expected to rise in 2017 suppressing the transport sector growth that posted 8.4 percent growth in 2016 a slight improvement from 2015 owing to a 2.8 percent increase in total cargo throughput at the port of Mombasa as well as an increase in total commercial passengers handled in the period under review. Compared to the East African Community Kenya’s growth is lagging behind its neighbors with Tanzania and Rwanda growing at 7.2 percent and 6 percent respectively. Uganda grew by 5.9 percent. The East African Community registered 6.1 percent growth even as Sub Saharan Africa grew by 1.4 percent from 3.4 percent registered in 2015

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 32

19/05/2017 12:34:45


REPORTS

Tapifare makes insurance telematics a top priority “When it comes to telematics, Africa represents a key emerging market. With the increasing demand for suveillance and security for commercial vehicles, the growing interest for insurance telematics solutions in Africa shouldn’t come as a surprise. The industry has grown exponentially, with companies unveiling cutingedge fleet management and vehicle recovery solutions to tap the rich industry writes Sandra Dinga

T

echnology as product providers continue to advance product features for specific fleet needs. The amount of telematics products available today has grown considerably over the past few years. Fleet solutions providers are amping up features to target fleetspecific needs to cut costs and boost productivity and even going a notch higher to offer applications and devices equipped with features such as location-based emergency services and navigation. Tapifare Kenya Limited is a veteran in the telematics and fleet management space, and the largest provider of insurance telematics in Africa with over 200,000 vehicles. Tapifare insurance telematics offering has been developed for the insurance industry giving you full access to the benefits of its extensive set of high frequency telematics data harvested from the vehicle and mobile device environments. The firm partners with internationally recognized brands to offer the best solutions in the African fleet management and telematics space. Tapifare is a branch of Ctrack, a South African brand with proven global recognition in vehicle tracking, insurance telematics and fleet management solutions. Ctrack’s global footprint spans across 70 countries and operates over 600,000 vehicles in Africa alone.

Alex Kyalo, Product Manager at Tapifare says one of the most important things for the logistics industry is getting quantitative reporting on how logistics is being done. The company prides itself in strong analytics, taking fleet management to a data-driven industry with their advanced innovative solutions. Tapifare’s modern insurance telematics application Discovery insurance, allows for usage based car insurance where technology is an important component in calculating insurance premiums. With vehicle telematics, car insurance premiums are determined by actual performance on the road. “Insurance telematics for driver risk assessment by insurance companies is a growing application of telematics services, and what we believe will become the de facto standard for managing driver risk on our roads,” explains Kyalo. Our solutions comprise of Ctrack telematic devices that transmit realtime driving data to insurers, who can then gain a more accurate picture of driving behavior and use this to set fairer rates for law-abiding, fuel-conscious drivers,” says Kyalo. Discovery insurance solution gathers data from the tracking system of a user from when the device was installed. It analyses the basic concepts of the driver for instance, acceleration, and breaking and then puts all these together in an analytic engine and conveys the data to insurance companies. Discovery insurance currently runs about 150,000 vehicles on the insurance programme for motor vehicles with each fitted with a Ctrack device for efficiency. “Our solution essentially allows insurers to be far more granular in the analysis of their insurance book – it means that no client ever has to be painted with the same brush as broad market statistics dictate. Through the analysis of telemat-

“Our solution essentially allows insurers to be far more granular in the analysis of their insurance book – it means that no client ever has to be painted with the same brush as broad market statistics dictate.

ics feedback, insurers can now reward good driving behaviour with reduced premiums, as well as penalise bad driving behaviour. It also allows insurers to assess whether clients have actually disclosed their vehicle use in line with what they are insured for.” “The real benefit of insurance telematics lies in the opportunity for the insurer to manage driver behaviour for the better, and in turn, dramatically reduce the loss ratios on the book of clients as a result of accidents. A very large percentage of insurance claims pertain to accidents, and in turn any insurer will tell you that speeding is a key cause of vehicle accidents,” he says. Big data analytics is fast becoming the enabler to not only comprehensively understand the insurance business, but also to actively address both top line growth opportunities as well as bottom line and risk cost management challenges. Discovery insurance answers the “how and why” questions with tangible evidence that allows for proactive planning and intervention. The application gives the client value for their money as it improves risk profile management, enables better cost management and increases revenue opportunities. “We believe that payment of insurance against the value of your car is entirely flawed.” “At Tapifare, we work to help insurers identify better risk, improve the risk profile of customers on the insurance portfolio and increase profitability in the long run. We want to make insurance profitable in Kenya by helping insurers reduce risks, monitor risks and take care of “bad drivers.” Tapifare serves nine of the biggest insurance companies in Africa and is currently in talks with leading local insurers on how to extend this innovative solution into the Kenyan market. “It is very important to deal with brokers on the topic of insurance telematics and to educate them on the advantages that it holds. They can in turn impart the knowledge to their clients to advise them on telematics and what it can do for them. In this day and age there is a clear benefit to having the ability to save on your insurance premiums by simply driving safely, not to mention the knock on effect that it will have on road safety,” concludes Kyalo.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 33

33 19/05/2017 12:34:45


FLEET MANAGEMENT

Education on fleet managment and vehicle tracking should become a key in 2017-Safetrac All these benefits are derived from the insights that companies can gain from the tracking solutions that companies like Safetrac Limited provide. Data collected via these systems is helping fleet owners make informed decisions about their companies. Education around fleet management and vehicle tracking should, therefore, become key in 2017. Business cannot afford to be affected by the implications of wrongly managing their fleets, something they can control if they invested in the necessary resources and technologies.

Most companies, across the world, including Africa are getting into the logistics and fleet management business. Fleet Management helps companies get the most of their vehicles and their staff.

A

ccording to Alparslan Kurtulus, Arvento Deputy General Manager, having a good fleet management system in place can help you monitor individual driving habits and also critical information about the vehicle status. “In Kenya, for example, we have a number of companies offering Fleet Management and vehicle tracking services. Transport companies and other business are also turning into technological Fleet Management systems to cut on operational costs and better manage their vehicle fleets. These technological investments in fleet management are transforming commercial vehicle

34

operations and leveraging analytics to generate major gains in efficiency.” He says managing a fleet is a challenge, to say the least, but the incorporation of the latest technology can make the entire process simple and very efficient. The tracking combines the use of automatic vehicle location in vehicles with a software that collects these fleets’ data for a comprehensive picture of vehicle locations. The technologies are also making it easy for goods to be tracked through the global chain, and this is having a massive impact in the sector. The potential value created by these asset tracking technologies is enormous and companies can obtain a broad array of benefits from them. Safetrac Limited for example, is one

of company providing vehicle tracking and fleet management services to clients across East Africa. The company has partnered with, Arvento, the 5th biggest company in the world in the field of telematics to offer these services to its clients. Arvento boasts of more than 45,000-client portfolio with its technology being utilized in more than 650,000 vehicles and mobile devices across three continents. Managing a fleet is a challenge, to say the least, but the incorporation of the latest technology can make the entire process simple and very efficient. The tracking combines the use of automatic vehicle location in vehicles with a software that collects these fleets’ data for a comprehensive picture of vehicle locations. According to Mr. Alparslan Kurtulus, Arvento Deputy General Manager, International Operations and Business Development. “Vehicle tracking and fleet management solutions are one of the biggest players in the world of data sourcing and mobile technologies that can help the fleet owners have much better and effective control of their fleet,”. While there is a cost associated with fleet maintenance and vehicle tracking, over the long term it saves money far more than it costs. Peter Echessah, is the CEO of Safetrac Limited. He says, “Safetrac utilizes superior European Technology that delivers efficient accurate and robust tracking solutions. The company provides fleet operators with visibility into vehicle location, speed and mileage and other insights into their mobile workforce, enabling them to reduce their operating costs and increase their revenues.” Safetrac goes beyond just tracking; into providing businesses with critical solutions that aid individuals and organizations in making meaningful operational and financial decisions. All these benefits are derived from the insights that companies can gain from the tracking solutions that companies like Safetrac Limited provide. Data collected via these systems is helping fleet owners make informed decisions about their companies. Education around fleet management and vehicle tracking should, therefore, become key in 2017. Business cannot afford to be affected by the implications of wrongly managing their fleets, something they can control if they invested in the necessary resources and technologies.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 34

19/05/2017 12:34:48


FLEET MANAGEMENT

What can we expect from Automotive Telematics industry in 2017?Fighting Fraud

2

017 is shaping up to be a very good year for companies one way or another involved in the automotive telematics industry. Automotive telematics is the monitoring of driver behaviour for a wide range of purposes, from determining a more accurate insurance premium to learning more about when and where people drive. The industry is abuzz with rising trends including usage-based insurance (UBI). Many companies are now shifting their focus away from traditional models for determining insurance premiums to the more efficient UBI which has proven beneficial. The new insurance model allows insurance companies to gain a clearer picture of how their customers actually drive, rather than simply determining a premium based on age, gender, experience, and, rather strangely, marital status. It also gives customers the ability to lower their premium by actually driving safely. UBI helps drivers who might face high insurance costs such as young male drivers under traditional insurance models drastically reduce their premiums. Finally, by increasing the transparency of the entire (and previously remarkably complicated) insurance process, UBI helps improve relations between insurance provider and the customer. Interest in usage-based insurance continues to grow. So prominent are UBI policies now that many industry experts predict that the companies who neglect to introduce them will have a hard time remaining competitive with the insurance firms that make them a key part of their value offering. Below are some of the automotive telematics market trends to expect in 2017:

Value-added services

This year, automotive telematics is expected to move beyond simply helping automotive insurance companies appeal to their customers. One of the big new trends will be to offer a wide range of “value-added services” based on automotive telematics technology. For some people, that’s probably sufficient. But automotive telematics technology is capable of doing far more than that.

By monitoring the driving habits of policyholders, insurance companies can offer a wide range of programs: for example, special discounts for avoiding driving on bad weather days, in busy parts of the city, or on highways known for dangerous accidents. For those who don’t see their premiums go down as a result of switching over to a UBI policy, automotive telematics can help provide a clear picture of what needs to change in order to see cost reductions.

Rise of the Connected Car

It’s hard to separate the rise of automotive telematics from the growth of the connected car industry. In 2017, both trends will continue their steady convergence, to the benefit of millions of drivers around the world. Put simply, as cars become more “connected” through the addition of advanced technologies like wireless internet connections, radar, sensors, touch screens and cameras the opportunity to take advantage of automotive telematics technology increases. Today, connected cars are heralded as a wave of the future because many boast the ability to steer drivers away from accidents using tech like lanechange monitoring, rear view cameras and autonomous braking. Given the growing number of automobiles on the road essentially turning many medium-sized and large cities into pulsating hives of traffic this technology has the potential to save time, money and, most importantly, lives. It prevents drivers — distracted by phones, billboards, pedestrians and a tidal wave of vehicles around them — from getting in potentially deadly accidents at every turn. But by bridging automotive telematics and the connected car, more can be done to help drivers. They could warn a driver of upcoming traffic problems on the current route while providing that same driver with a safer alternative route. They could alert a driver to significant weather systems ahead, pointing them to a path that takes them away from the issue or suggesting local hotels to duck in for the night. Finally, they could help emergency teams and insurance companies come to the aid of a driver who’s been in a serious traffic accident.

Ever wonder how an insurance company determines what you pay for your automotive insurance? There are a number of factors to consider. That’s because insurance companies are constantly having to investigate cases of insurance fraud. Sadly, too often people seek to take advantage of loopholes in the system, and the result is often higher premiums for their fellow drivers. Automotive telematics will start to change that in 2017. By providing insurance companies with a clearer picture of a driver’s activity leading up to an accident, they can determine if a driver’s story holds water. Telematics will give investigators the tools they need to determine how and why and accident occurred and who might have been most affected. In the end, this could help insurance companies respond quicker, helping drivers get back on the road faster. More importantly, however, it has the potential to help insurance companies weed out fraudsters, thereby lowering the premiums for other drivers

Targeting Millennials

It’s no secret that millennials tend to be more comfortable with cuttingedge technology than people of other generations. That’s why insurance companies will continue to target this age group in 2017 as they seek to increase adoption of usage-based insurance policies based on automotive telematics technologies. Millennials, who also tend to pay more for their automotive insurance than people from other age groups, also stand to benefit the most from UBI. For automotive insurance companies, the new trends could help them reduce costs and improve their relations with customers. For customers it could help them cut the price of their insurance, helping them to direct funds elsewhere. For automotive manufacturers, telematics sweeten the deal already offered by rapidly evolving “connected” cars. And for everyone it could mean safer, more efficient roadways.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 35

35 19/05/2017 12:34:49


AVIATION ROUNDUP

Boosting training: KQ and GE donate high tech aviation training devices to TUK

A

erospace and Aviation Engineering programme students at Technical University of Kenya (TUK) can now afford hands-on training on a high-tech CF680A2 aircraft engine that powers Airbus A310 and Boeing 767. The CF6-80A2 engine manufactured by General Electric (GE) along with aviation maintenance training books, training aids, reading materials, used aircraft parts and aircraft manuals were donated today by Kenya Airways, GE and Boeing as a joint initiative to enable capacity building in aviation training schools in the region. Speaking during the handover ceremony held at the Technical University of Kenya, Kenya Airways, Strategy and Performance Management Director Thomas Omondi said, “Our donation today further strengthens our commitment to ensure a stronger foundation of aeronautical knowledge, skills and more experience to aviation technicians and engineers even as they prepare for job market either with us or elsewhere. We are extremely happy to support the next generation of aircraft maintenance engineers”. On his part, Regional Sales Director for GE Aviation in Africa Dr. Rajiv Bissessur said, “As Africa’s aviation industry continues to grow, the need

for skilled aviation professionals in the region is also on the rise, and GE Aviation is proud to play a role in the skill development efforts underway at the Technical University of Kenya.” “The donated CF6 engine will enable aeronautical engineering students to experience hands-on learning with one of the most popular wide body aircraft engine in service today and increase the pool of talented aviation experts that will be needed to service the needs of the airlines in Africa and

RwandAir starts flying to Zimbabwe after 10 years negotiation

RWANDAIR made its debut flight to Harare on April 5, 2017 with the carrier promising to fly daily starting May. The airline will be flying four times a week on Mondays, Wednesdays, Thursdays and Saturdays. RwandAir general manager (commercial), Mikael Gobena said that schedules were already in the airline’s system and was ready for daily flights to Zimbabwe. He said the increase in frequency will also be tied to the airline’s plans to introduce flights to London next month. Gobena said the carrier was on an expansion programme, which would see the airline flying 700 000 passengers in the financial year ending June 30.

36

In the next financial year, the airline would have flown one million passengers, Gobena said. He said the expansion programme was on the realisation that, as a landlocked country, it required an international air transport service. Transport and Infrastructure Development permanent secretary, Munesu Munodawafa said negotiations had taken 10 years and Zimbabwe skies had been waiting for RwandAir to come. “It was courtship, it is the results that matters,” he said. Munodawafa said the airline should consider synergies with local airlines, possibly, Air Zimbabwe. “Consider other partnerships with local airlines if it makes business sense, which I hope it will. This can be done in

around the world.” Rajiv added. Receiving the training equipment’s, Vice Chancellor Technical University of Kenya Prof. F.W.O Aduol hailed the partnership and said, “This donation will provide the much needed practical and research orientation to our technician and engineering students and thus increase their competitiveness. This will make us the University of Choice for aspiring aviation professionals in the region”.

the context of business arrangements,” he said. Civil Aviation Authority of Zimbabwe (CAAZ) board chairman, Thembinkosi Magwaliba said the coming of RwandAir showed that Zimbabwe “is on the rebound and coming back to reclaim its space in the world of aviation”. The coming on board of RwandAir is on the back of concerted efforts by CAAZ to lure airlines that used to fly to Zimbabwe and new carriers. At its peak in 1999, 42 airlines used to fly into Zimbabwe. The number included eight cargo planes. Currently 20 airlines are flying into Zimbabwe. RwandAir operates one of the youngest fleet on the African continent and flies to over 20 destinations across Africa. Its fleet include two wide-bodied planes (A330-300 and A330-200), three Boeing 737-800, two Boeing 737-700, two Bombadier CRJ-900 and two Bombadier Q400.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 36

19/05/2017 12:34:49


AVIATION ROUNDUP

Nigeria to construct modern aircraft assembly plant

The school prides itself in having the best training facilities including its own airport, a control tower, students’ hostels, training aids, production units among others

N

igeria has launched plans to build a state-of-the-art aircraft assembly plant as it looks to become a leading aviation hub for sales and maintenance of Aircraft in Africa. Interjet Nigeria Limited in collaboration with Austrian aircraft manufacturing company, Diamond Aircraft Industries are in talks with the federal government on their plan to establish the plant. When established, the assembly plant will cater to the West African market and beyond. Managing Director of Interjet Nigeria Limited, Seun Peters said: “Interjet Limited, in partnership with Diamond Aircraft of Austria, is working towards building a state-of-the-art maintenance facility in Abuja to service Nigeria and other West African countries.” Diamond Aircraft Industries is the third largest manufacturer of aircraft for the general aviation sector including aviation aircraft and motor gliders. The manufacturer is supplying the Nigerian College of Aviation Technology (NCAT), Zaria 20 trainer aircraft with after sales skills training.

“We are one of the best training institutions around the world that have the capacity and ability to do all of those trainings that are listed by the International Civil Aviation Organisation (ICAO).

During the commissioning of the delivery of the first batch of the aircraft the representative of Diamond, Reinhard Schwaiger said that the management of the company would take decision on when the plant would be established in Nigeria. On the delivery of trainer aircraft to NCAT, Schwaiger said the company had already trained NCAT technical personnel that would be maintaining the aircraft. “We have trained some personnel already. Diamond customer service is a one-stop shop. We train for the airframe and the engine,” he said. Diamond, in partnership with Interjet would work with NCAT and Nigeria to develop technical skills in aircraft maintenance when the plant would be established. The college, which is among the top aviation training institutions in Africa, is expected to play significant roles in the development of aviation in Nigeria. The Minister of State, Aviation, Senator Hadi Sirika, commended Diamond and Interjet and praised the aviation College for its outstanding achievements. “We are one of the best training institutions around the world that have the capacity and ability to do all of those trainings that are listed by the International Civil Aviation Organisation (ICAO). I can’t remember any institution that has most of those things NCAT has got.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 37

37 19/05/2017 12:34:51


PORTS

Rwandese cargo increase at the port of Dar es Salaam-TPA Tanzania Ports Authority (TPA) records an increase in the number of cargo destined to Rwanda having made continued efforts to attract more cargo from transit markets

T

PA says the first quarter in the previous financial year 2016/2017 it handled a total of 228,655 tons, higher than their target of 212,500 tons. In a statement released by the authority, performance was above target by 7,155 tons, which is 3.2 percent. The statement added that cargo handled during the quarter was above 211,095 tons handled in the corresponding first quarter in the financial year 2015/16 by 17,560 tons or 8.3 percent. TPA also has increased cargo traffic handled for domestic consumption during the quarter. A total of 2,482,144 tons were handled compared to estimated seaborne trade target of 1,800,000 tons per quarter. “The performance was above the estimated quarter seaborne trade by 37.9 percent and above quarter budget of 2,157,147 tons by 324,997 or 15.1percent. Cargo handled during the quarter under review was above the corresponding 1st quarter of 2015/16 by 279,137 tons or 12.7percent,” reads the statement. Moreover, in a move to speed up delivery of cargo, the government has

38

“The performance was above the estimated quarter seaborne trade by 37.9 percent and above quarter budget of 2,157,147 tons by 324,997 or 15.1percent. Cargo handled during the quarter under review was above the corresponding 1st quarter of 2015/16 by 279,137 tons or 12.7percent,” reads the statement reduced a number of checkpoints from 23 to three checkpoints. This has improved tremendously the transit time from Dar es Salaam port to Rusumo which now takes three days only from the previous seven days. In July, this year, Rwandan President, Paul Kagame visited Tanzania and expressed commitment of the entire business community to use the Dar es

Salaam Port as their gateway for trade. This year, TPA Director General, Mr. Deusdedit Kakoko visited Rwanda and managed to meet Rwanda Business Community who use Dar es Salaam port the port of Dar es Salaam in order to hear their views and challenges they face when using the port. Mr. Kakoko promised to work with other stakeholders to address challenges raised during the discussion. He said TPA is doing everything in its power to reduce the costs of doing business between the two countries and improve business. Various measures have already been taken to improve efficiency at the port of Dar es Salaam and the Central corridor at large. Some of the improvements include implementation of 24×7 working hours for all stakeholders in the port and assured safety and security. TPA has also introduced E-payment system where customers can now receive invoices and pay all port charges electronically. This has reduced the amount of time it takes to effect payments. There are also efforts by the government to construct a standard gauge railway system from Dar es Salaam port to Kigali and the developing of a dry port at Isaka in order to enhance cargo clearance for Rwanda.

PROCUREMENT & LOGISTICS MANAGEMENT MAY, 2017 Issue No.: 10/2017

Proc Mag May 2017.indd 38

19/05/2017 12:34:52


PORTS

Efficiency at Port of Dar es Salaam attracts more Shipping Lines

T

he Prime Minister of the Federal Democratic Republic of Ethiopia Hailemariam Desalegn commends the Port of Dar es Salaam for higher efficiency and said that the Ethiopian Shipping Line will start to call the Port “I am glad to learn that the Tanzania Ports Authority is working very hard to make the service competitive so that when we use it will benefit our people.” He underscored the importance of marine transportation for the two nations to attain economic transformation and quicker economic volumes. “…through our largest African Ethiopian airline our aviation group is keen to use port in transporting mechanism using the port transporting cargo as well by airfreight,” he noted. He said his Government will send a team of experts to team up with Tanzania counterparts and identify areas of cooperation in transportation sector. While welcoming the Prime Min-

ister of Ethiopia, the Tanzanian Prime Minister, Hon. Kassim Majaliwa Kassim expressed Tanzania commitment to strengthen further bilateral relations existing between the two countries. Earlier, the TPA Director General Eng. Deusdedit Kakoko briefed the Ethiopian Premier on activities of the Port and expressed commitment that Tanzania Ports Authority is committed to serve Ethiopia further in its unstoppable development. “We are ready with such capacities to receive Ethiopian ships and cargo through efficient, effective and safe cargo hub, “Eng. Kakoko noted. Eng. Kakoko said Ethiopian cargo will be handled safely through a fasttracked and properly networked logistics of a surface and air intermodal transport system. As such, he reiterated that TPA is prepared to Team-up with Ethiopian counterparts to make the dream of two countries a reality based on the fact that the political will has been created.

On his part the Minister for Works, Transport and Communications Prof. Makame Mbarawa commended the Federal Republic of Ethiopia for achievements made so far in terms of unprecedented industrial growth. Prof. Mbarawa said the Government of Tanzania enjoys cordial diplomatic relations with the Ethiopian, urging that such relations be extended wider trade and economic relations. He said already the Government of Tanzania has exchanged experiences on best practice from the Federal Democratic Republic of Ethiopia. In areas of economic policies, investments energy, transport, sports sectors and housing schemes among other key areas. “We are particularly impressed by the fact that Ethiopia has made a notable industrial growth- the mission we share with our Fifth Phase Government under His Excellency Dr. John Pombe Joseph Magufuli, the President of the United Republic of Tanzania,” he said.

PROCUREMENT & LOGISTICS MANAGEMENT MAY 2017 Issue No.: 10/2017 Proc Mag May 2017.indd 39

39 19/05/2017 12:34:52


Proc Mag May 2017.indd 40

19/05/2017 12:34:54


, Nairobi - Kenya

Proc Mag May 2017.indd 41

19/05/2017 12:34:55


Proc Mag May 2017.indd 42

19/05/2017 12:34:57

May 17 Issue  
May 17 Issue  
Advertisement