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Uhuru seeks KQ rescue, ease of doing business

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President Uhuru Kenyatta delivers his Seventh State of the Nation Address during a Joint Sitting of Parliament in line with Article 132 of the Constitution. PHOTO | PSCU

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Summary

  • The Head of State urged Parliament to pass the National Aviation Management Bill 2020 and the Business (Amendment) Bill No. 2 of 2020.
  • Mr Kenyatta said the passage of the National Aviation Management Bill 2020 would bolster plans to turnaround the operations of the debt-ridden airline.
  • The Bill flew into headwinds in September after a section of MPs raised the red flag on the lack of input by Kenyans and other stakeholders in line with the Constitution.

President Uhuru Kenyatta has asked Parliament to fast-track passage of proposed laws that seek to return the national carrier to government ownership and cut the cost of doing business in the country.

The Head of State urged Parliament to pass the National Aviation Management Bill 2020 and the Business (Amendment) Bill No. 2 of 2020.

Mr Kenyatta said the passage of the National Aviation Management Bill 2020 would bolster plans to turnaround the operations of the debt-ridden airline.

“I urge Parliament to prioritise the consideration of various seminal Bills that are pending before the legislature, such as the National Aviation Management Bill, which once enacted, will anchor the turnaround of the Pride of Africa – our national carrier, Kenya Airways,” he told a joint sitting of the National Assembly during a State of the Nation Address Thrsday.

The Bill proposes that KQ becomes one of three subsidiaries in an Aviation Holding Company. The others would be Kenya Airports Authority, which will operate all the country’s airports, including Jomo Kenyatta International Airport (JKIA) in Nairobi, under an investment arm dubbed Aviation Investment Corporation.

The Bill flew into headwinds in September after a section of MPs raised the red flag on the lack of input by Kenyans and other stakeholders in line with the Constitution.

The legal hitch has occasioned delay in the plan by the government to nationalise the loss-making Kenya Airways as regional competitors seeking to carve out market share pour cash into their national carriers.

A section of lawmakers rejected the Bill, arguing that Parliament had received petitions from professional bodies like the Law Society of Kenya (LSK), which argued that the parliamentary Transport Committee rejected their views.

This prompted Speaker Justin Muturi to order the Transport Committee to reconsider the Bill and accord aggrieved stakeholders further opportunity to give their views.

Parliament is, under Article 118 of the Constitution, compelled to invite the public in the process of changing laws, including holding public sittings, inviting submission of memoranda and expert views.

The government had a target of completing the deal by end of October, hoping to emulate the success of State-owned Ethiopian Airlines, sub-Saharan Africa’s biggest airline.

KQ was privatised 24 years ago but sank into debt and losses in 2014 after a failed expansion drive, costly purchase of aircraft and a slump in travellers after a major terror attack.

TRAVEL SUSPENDED

In August, it saw its first-half loss nearly double from a year earlier to Sh14.36 billion, on months of suspended air travel due to Covid-19.

The Transport Committee chaired by Pokot South MP David Pkosing has since tabled a fresh report on consideration of the Bill, which awaits MPs scrutiny.

The State is keen on a long-term solution anchored in the nationalisation of Kenya Airways, arguing that the carrier’s financial troubles went beyond the Covid-related woes. Countries such as Tanzania and Rwanda have stepped up investment in their national carriers, threatening KQ’ market share.

Ethiopian Airlines runs air transport assets, including airports and fuelling operations, under a single company. Funds from the profitable parts support the others.

Mr Kenyatta also asked MPs to give priority to the passage of the, Business (Amendment) Bill No. 2 of 2020 which seeks to reduce the cost of doing business and time spent on certain transactions in Kenya. For example, the Bill targets to amends parts of the Company Act of 2015 to lift the requirement of affixing a company seal in the execution of company documents, contracts and deeds.

Under the proposed changes, a document, contract or deed would be considered to be validly executed by a company if it is signed on behalf of the company by two authorised signatories or by a director of the company in the presence of a witness who attests the signature.

Further, the proposed changes seek to abolish the use of bearer shares — unregistered equity securities owned by the possessor of the physical share documents — whose use has plummeted globally because of the increased costs they incurred besides the risk of abuse in funding terror and crime networks.

The additionally seeks to amend the Land Registration Act 2012 and abolish a requirement that one produces a land rent and rates clearance certificates before the Land Registrar can effect the registration of an instrument of transfer of land. The proposed change will transfer the responsibility to the purchaser to ensure that the vendor of the property has paid all the land rates and rent in respect of the property.