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Turkish Airlines profits in Africa, where others fear to fly

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NAIROBI, Sept 12 (Reuters) – When Turkish Airlines opened a direct daily route to a war-ravaged African failed state plagued by Islamist militants, industry insiders were sceptical.

Not anymore.

“Somalia is one of our most profitable destinations worldwide,” Mustafa Ozkahraman, Kenya country manager for Turkish Airlines, told Reuters in an interview. “Because we are the only (international airline). The first and the only one.”

The Istanbul-based carrier is replicating the move across Africa, expanding to destinations shunned by others. The move comes as political unrest at home last year pushed the airline into the red for the first time in 17 years.

In 2011, Turkish Airlines flew to 14 African cities. By the end of this year, it will operate 52 routes from Istanbul across Africa, after launching a route to Freetown, the capital of Sierra Leone.

From January to June, just under a tenth of total passenger and cargo revenues came from Africa, according to results for the first half of 2017 that showed a net loss of $434 million.

Rival Emirates has less than 30 routes. Last year, the Dubai-based airline cut one African flight and reduced the frequency of several others.

It cited weak economic conditions in Africa, where many countries dependent on revenues from commodities exports have seen economic growth fall below population growth.

But Turkish Airlines, which is 49 percent state-owned, is bullish on Africa, a continent of 1 billion people.

Ozkahraman denied the growing ties between Ankara and many African states drove the airline’s strategy.

“A lot of people would think our flights to Somalia were not business-related,” he said. “(But) we do the feasibility and we have to believe the route will be profitable, either now or imminently.”

He declined to give a specific breakdown on profits for African flights, but said routes like the daily flight on a wide-body jet from the Nigerian city of Lagos were critical to the airline’s bottom line.

Despite challenges like poor security or electricity cuts at some airports, such flights feed passengers into Turkish Airline’s hub, making routes like Istanbul to London profitable.

“You have to have those destinations to make your hub busy and your profitable destinations more profitable,” he said.

Last year the company posted a net loss for the first time since 2000, after a demand slump caused by political turmoil and militant attacks at home. Ozkahraman said some of the shortfall was also due to new planes – 210 have been ordered, he said.

Load factors – a measure of how full planes are – are over 70 percent on many African routes, just below the airline’s global average of 80 percent, he added.

The wide network means that, unlike Ethiopian Airlines, Turkish does not partner with smaller African carriers notorious for poor service.

It opened a business class lounge in Nairobi’s airport in July 2016, its second international lounge after Moscow. British Airlines and Emirates began renting the Nairobi lounge for their business class travellers earlier this year, Ozkahraman said. (Editing by Katharine Houreld and Mark Potter)

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Camel milk is a healthy investment

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DAILY NATION — In the light morning breeze, camels stick their heads out of acacia trees. Close by are calves separated from their mothers in an enclosure made of acacia branches.

The Seeds of Gold team is in Karionga village, a few kilometres from Nanyuki town, Laikipia County, to meet Halima Haji.

The 78-year-old woman rears camels for milk.

Her herd contains 62 dromedary camels which produce a maximum of between six to eight litres of milk each daily and four litres during the dry season.

“That one is from Turkana, the other is Pakistan and a majority of them are Somali,” Halima tells us as she takes us around the farm.

In a good month she can earn a Sh1.2 million selling the milk at Sh80 per litre locally. The milk price can go up to sh100 to Sh150 in supermarkets.

As we let the amount sink, Halima is already telling us how spot the different breeds based on height, shape and skin colour.

“The Turkana one is shorter and has a dark brownish colour while the Somali one is white and tall with the males having a broader face. I do not keep much of Pakistan camels because they are nomadic and easily get lost,” said Halima.

Halima started out with only six camels which she bought in Isiolo County at Sh15,000. Currently, one camel sells at between Sh150,000 and Sh200,000.

“I was interested in rearing the camels after learning of the health benefits of their milk,” she said.

Every morning before 8am when she visits the farm she has leased to graze the camels, she drinks three glasses of the raw milk.

Camel milk is said to be high in insulin which makes it suitable for diabetics, people suffering from arthritis and lactose intolerant children, among others.

Her daughters who have accompanied their mother to the grazing fields say camels are her true love.

“You have really made her day by coming here, she is very happy now,” said ZamZam Haji, Halima’s youngest daughter.

LESS FOOD AND WATER

The animals’ productivity largely depends on the seasons such that during the dry season the milk production per animal goes down compared to days rains are heavy and consistent.

Currently, the vegetation that germinated following the rains experienced in the last quarter of last year is diminishing and this is the worst season for the herders.

She hoping the dry spell will be assuaged semi-zero grazing system.

“The camels will definitely go out in the field to graze but I am planning that come back and graze somewhere together,” she said.

Halima is currently stocking up feeds for the animals to counteract the imminent drought as the weatherman predicts rains will begin in April.

The animals are going to be fed with bran and seed cake which will ensure they continue being productive despite the drought.

“We want the government to come up with a directive that will see companies manufacture feeds for camels just like there is for cattle and poultry,” said Halima.

Camels are replacing cows and goats in the pastoralist communities as choice livestock as the country continues to grapple with the vagaries of climate change.

According to Halima, camels can do with less food and water compared to livestock.

In her herd she has one male dromedary camel that helps in reproduction.

She said land shortage is the main hindrance to camel farming.

For instance she has leased a 300-acre piece of land to graze her camels at Sh20,000 per month.

They also rely on neighbours who partitions part of their land to allow the camels to graze at a fee of Sh500 per month.

Halima has previously had a herd of over 200 camels but lost a number to drought that took a toll on both humans and animals countrywide last year and to diseases.

REAR CAMELS FOR MILK

She has employed three men who take care of the animals and milk them.

“I only allow them to milk the camels once per day in the morning, the rest of the day the calves are left to feed,” she said.

John Oguk, an expert in camel farming, said the common diseases that affect camels are foot and mouth, lumpy skin disease and mastitis.

Dr Oguk says a camel’s hump consists of stored fat which the animal metabolises when food and water are scarce.

“When the camels use their stored fat in the hump, it will diminish but will refill once they eat or drink again,” said Dr Oguk.

Halima said she collaborates with the veterinary doctors in the county to ensure her animals are all well vaccinated and free of diseases.

Besides liaising with the county vets, she also ensures her camels are bathed with pesticides that ensure they are free of ticks and other harmful flies.

She sells her milk to WhiteGold milk processing company that pasteurises and packages the milk in Nanyuki.

The company that was opened last year buys milk from pastoralist communities as far as Isiolo, Marsabit and Wajir counties. It is seeking a to reach Mandera County this year.

Camels are not only used for milk. They also leather and meat products.

“We have used the camels for transport for long but I think it is time we used them to turn in a profit,” she said.

Halima is looking to bring women together to rear camel for milk.

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How to Turn $200,000 Into a $670 Million Business

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Seven years ago, Ismail Ahmed set out to build a startup that could send cash electronically from the U.K. to Africa. He had $200,000 and a lot of experience in the money transfer business in his native Somalia.

Today, London-based WorldRemit Ltd. sends money to 148 nations and has just raised $40 million in a deal led by LeapFrog Investments, an investment firm in London, the company said in a statement on Thursday.

The Series C funding round values the fintech firm at more than $670 million, according to a person familiar with the transaction, who asked not to be identified because the matter is private. WorldRemit’s longtime backers, Accel Partners and Technology Crossover Ventures, invested in the deal.

WorldRemit, which specializes in sending money via mobile phones, will use the cash to try to grow its customer accounts globally to 10 million from 2 million by 2020. The company is making a big push in transfers between the U.S., Asia, and Latin America.
“The U.S. will grow our revenues as much as 40 percent over the next few years,” Ahmed, WorldRemit’s chief executive officer, said in an interview.

But the company faces stiff competition from The Western Union Co., the longtime powerhouse in the $444 billion global remittance business, as well as other fintech firms such as Remitly Inc., a Seattle-based company that raised $115 million in a private fundraising deal in October.

WorldRemit is on course to record 60 million pounds ($81 million) in net revenue this year, a 46 percent jump from 2016, according to Ahmed. The company is looking at a potential initial public offering in two to three years, he said.

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New market means increased economic opportunities for one Somali town

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In Somalia’s Puntland region, Bossaso’s local market provides a source of income for local traders. For women, however, the market is especially important.

After years of conflict, many households are reliant on money generated by women to survive. In some households, women contribute more than 70 percent to their families’ income.

And the majority of women in Somalia earn money from informal sectors – including working in local markets.

Unfortunately for traders in Bossaso, selling their goods in the city’s main market was no longer an option. In 2012, a fire severely damaged Bossaso Market – a place many women traders depended on for their livelihoods.

With funding from the Government of Japan, UNOPS oversaw the construction of a new market with improved facilities to support women entrepreneurs in Bossaso.

“We’re grateful for the support of the Government of Japan and UNOPS, who worked closely with us to implement the project,” said Engineer Yazin Mire, Bossaso’s mayor. “Many businesses will benefit from this market, which will help several different communities, including Yemeni refugees and returnees who fled from the conflict in Yemen.”

Giving women a say in their future

Before the construction of the new Bossaso Market began, information was collected from female traders during an extensive consultation process. This allowed them to be actively involved in the design and planning of the new site, ensuring their needs were taken into account from the beginning. In all, nearly 2,000 market traders, both male and female, participated in the data collection process. That data was used to define the scope of the construction of the new market.

An extensive community needs assessment was also conducted to encourage a sense of community ownership of the project, as well as to contribute to the long-term sustainability of the new market.

Training for the future

The new Bossaso Market will enable traders, particularly women, to become economically self-sufficient. In addition to the new market, local entrepreneurs also received training – carried out by the Japan Center for Conflict Prevention – aimed at teaching them new skills to help their businesses thrive. More than 200 traders – nearly 90 percent of them women – either received business skills training or business start-up kits.

“The Government of Japan is delighted with the success of this project, which contributed to stabilization of the region through the empowerment of women, in collaboration with the Japan Center for Conflict Prevention,” said the Embassy of Japan. “The Government of Japan is confident that those who got vocational training will play an important role in leading the local economy and society.”

Asiya Ali Farah owns a kiosk in Bossaso. She participated in a training session on microfinancing. “One day, I hope I will become a lender,” Asiya said. “So that I can give loans to Somali women who need help starting up small businesses to feed their families.”

“Microfinancing is not new in Somalia, but there are not many female traders with access to it yet,” explained Japan Center for Conflict Prevention Secretary General Yukiko Ishii. “The training was intended to help participants access emerging, locally available microfinancing schemes to boost their small business.”

The new skills learned as part of the training sessions will help market traders generate a higher income. This in turn can help increase economic development in the region – and encourage stability.

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