NSE mulls listing shoe retailer on main board after its $4m acquisition binge

Nairobi Business Ventures (NBV) is set to graduate to the main trading platform of the Nairobi Securities Exchange (NSE) after spending Ksh428.75 million ($3.57 million) on the acquisition of four firms in four months.

The shoe retailing firm, which is listed on the Growth and Enterprise Market Segment (GEMS), disclosed through its latest annual report that between April and August last year it acquired the following business ranging from automobile to aviation and the extractive sector: Air Direct Connect Ltd for Ksh15.54 million ($129,500), Delta Automobile Ltd (Ksh130.4 million, $1.08 million), Aviation Management Solutions Ltd (Ksh61.56 million, $513,000) and Delta Cement Ltd (Ksh221.25 million, $1.84 million).

The acquisitions were financed through the proceeds of the sale of 857.51 million shares equivalent to 63 percent of the total issued shares of the firm estimated at 1.35 billion shares.

The new shares were priced at Ksh0.5 ($0.004) per share, helping the firm to generate a total of Ksh428.75 million ($3.57 million) from the share sale.

The firm’s top shareholders include Shreeji Enterprises Ltd (Kenya) which controls 32.69 percent stake, followed by Delta International FZE (30.66 percent) and Soni Haresh Vrajlal (16.42 percent).

NSE chief executive Geoffrey Odundo told The EastAfrican that the firm’s swift growth puts it in a pole position for promotion to the main trading platform of the exchange from the GEMS market that is mainly reserved for the small and medium-sized Enterprises.

Currently, firms seeking to list on either the Main Investment Market Segment or Alternative Investment Market Segment must have a paid-up capital of Ksh50 million ($41,666.66) and net assets of Ksh100 million ($833,333.33). The firms should also have a minimum of 1,000 investors, a minimum free float of 25 percent and should have recorded profits for three years in the past five years.

Strategic expansion

Last year, NBV was acquired by the UAE-based Delta International FZE, with the new owners seeking to use the four companies — Air Direct Connect Ltd, Delta Automobile Ltd, Aviation Management Solutions Ltd and Delta Cement Ltd — to transform it from a struggling shoe retailing firm to an industrial unit.

Delta Cement which is expected to be the most significant subsidiary of NBV, is seeking to set up a cement manufacturing plant with an annual capacity of one million metric tonnes in Mavoko, Machakos County.

“There has been a growing demand for cement in Kenya and the prices of 50kg bags have increased significantly in the recent past. We foresee this demand being sustained over the long term thereby providing us with the opportunity to establish ourselves in the manufacture of cement,” according to the report.

“Management has obtained all the statutory requirements for the establishment of the plant. So far, the factory’s building plans have received the requisite approvals and we have also received approval for the environment licence.”

The NBV management are negotiating on the funding facilities for the project.

Kenya’s cement sector is currently dominated by Bamburi, National Cement Company, Mombasa Cement, Savannah Cement, Rai Cement and Ndovu Cement Ltd.

Delta International also owns other subsidiaries in the region including Delta Holdings Kenya (real estate), Shreeji Glass Uganda and Shreeji Chemicals Kenya, which has an annual sodium silicate production capacity of about 180,000 metric tonnes.

In 2020, NBV shareholders approved Ksh83 million ($691,666.66) capital injection by Delta International FZE.

They also agreed to allot and issue up to a maximum of 415 million ordinary shares of Ksh0.5 ($0.004) each in the company to Delta International subject to payment of the aggregate subscription price of Ksh83 million ($691,666.66) being Ksh0.2 ($0.001) per new share.

The shareholders also approved a proposal to change the structure of the firm’s nominal capital from Ksh50 million ($416,666.66) divided into 50 million shares of Ksh1 ($0.008) each, to Ksh50 million ($416,666.66) divided into 100 million ordinary shares of Ksh0.5 ($0.004) each. There was an increase in the nominal share capital of the company by the creation of 400 million new ordinary shares of a par value of Ksh0.5 ($0.004) each which rank at the same rate and have rights equal to the existing ordinary shares of the company.

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Ruto pledges wealth tax on tycoons to fix Kenya’s budget

Kenyan President William Ruto has revived a proposal to impose higher taxes on Kenya’s super-rich and high-income earners, endorsing the introduction of a wealth tax that failed to sail through Parliament over the past four years.

The idea is the latest in a long list of efforts to raise taxes on the super-rich as the new administration seeks to cut reliance on loans to fund the national budget amid the burgeoning public debt.

The President told Parliament in his inaugural speech on the floor of the House on Thursday that his administration will seek to raise taxes from the wealth accumulated by the richest Kenyans over getting revenues from workers and traders.

This sort of tax would be based on a person’s net worth after deducting their liabilities and would only apply to the richest citizens.

Different from many other kinds of taxes such as income tax, people with sufficient networth would owe wealth taxes even if they failed to take any action, like earning income or selling assets.

It would apply to all property such as real estate, cash, investments, business ownership and other assets, less any debts, and investors would owe the tax each year based on the market value of the assets.

“The economic principles of equitable taxation require that the tax burden reflects ability to pay. This is best achieved by a hierarchy that taxes wealth, consumption, income and trade in that order of preference. Our tax regime currently falls far short of this,” Dr Ruto said.

“We are over-taxing trade and under-taxing wealth. We will be proposing tax measures that begin to move us in the right direction,” he said.

This means the government will impose higher taxes on the rich, followed by excise taxes on consumption of items like beer, cigarettes and betting before targeting workers’ income tax and lastly traders for corporate and sales taxes.

Dr Ruto took oath of office this month after a hard-fought electoral contest, in which he promised he would create economic opportunities for the poor.

But he faces a narrow fiscal space to implement his policies, after the government of predecessor Uhuru Kenyatta ramped up public borrowing to fund infrastructure projects, with debt repayments taking more than 60 percent of taxes.

Dr Ruto’s administration seeks to channel government resources to industries that can create the most jobs, such as farming and small businesses, which will be offered concessional lending through the so-called Hustler Fund.

He plans to introduce the wealth tax first, which was first mooted in 2018, to finance his pro-poor plans, and looks set to face opposition among the class it proposes to target.

Last year, the Treasury said they were looking at fiscal changes that would go into the Finance Bill, including discussions over the wealth tax among many other fiscal reforms to boost revenues.

The Treasury then increased capital gains tax from five percent to 15 percent in the Finance Act 2022 that will take effect from January next year.

Proponents view the wealth tax as a way to boost the government’s public coffers by taking extra money from those who do not really need it.

They argue that such a tax generally only applies to the wealthiest, and it can be argued that the extra taxation will have zero impact on their quality of life.

Critics reckon that a wealth tax is difficult to administer, tends to encourage tax evasion, and has the potential to drive the wealthy away from countries that enforce it.

These caveats, coupled with debates about how to implement it fairly, perhaps explain why only a few countries in the world impose such a tax on their residents, analysts say.

Of 38 Organisation for Economic Co-operation and Development (OECD) countries, only three European countries levy a net wealth tax, including Norway, Spain, and Switzerland.

France and Italy levy wealth taxes on selected assets but not on an individual’s net wealth.

OECD countries that have collected revenue from net wealth taxes grew only slightly from eight in 1965 to a peak of 12 in 1996 to just five in 2020.

“In the past and to some extent even now people try to hide their assets through trusts,” said Nikhil Hira, a tax expert and partner at Kody Africa LLP, a financial consultancy.

Kenya could introduce a wealth tax for the high net worth individuals, who will pay a small share of their net worth.

It could take the form of a higher tax rate for high-income earners.

In 2018, the Treasury sponsored a Draft Income Tax Bill that sought to impose a higher maximum tax rate of 35 percent on income of more than Sh9 million per annum or Sh750,000 a month.

At the time, the top tax rate was 30 percent on all income exceeding Sh564,709 per annum or Sh47,059 a month.

The Treasury said it dropped the bid for the higher tax rate after collecting the views of the public.

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Uganda’s Sarrai Group cleared to resume operations in Mumias Sugar

Uganda-based Sarrai Group has been cleared to resume operations at Mumias Sugar Company in western Kenya after the Court of Appeal temporarily suspended a High Court decision to kick the firm out of running the troubled miller.

The appellate court said in a ruling that they were persuaded that the Sarrai Group together with KCB-appointed administrator PVR Rao had demonstrated that their appeal will be rendered useless if the decision cancelling the lease in April is not suspended.

High Court judge Alfred Mabeya had cancelled the 20-year-lease granted to Sarrai and appointed Kereto Marima as the administrator, pending a process to pick a new company to lease the Mumias plant. The miller was placed under receivership by KCB Group in 2019 over mounting debts.

KCB argued that its rights as secured creditors will diminish if Mr Marima’s actions pursuant to his appointment are not stayed.

“Indeed, they fear that they may not be able to recover the securities. To our mind, these fears are not idle,” appellate judges Asike Makhandia, Jamila Mohammed and Sankale ole Kantai said.

In the intended appeal, KCB and Sarrai argue that the trial court erred in undermining its interest as a secured creditor by holding that public interest surpasses the interests of the creditors.

The lender said Mr Marima will continue with the process of administration including the taking over the assets that had been charged to secure Mumias’ indebtedness to KCB and deal with the assets in whichever manner he deems fit its detriment.

KCB Group further said there was no guarantee that it will be able to recover its securities, should the intended appeal succeed.

Sarrai, in an affidavit of Mr Rakesh Kumar Bvats, a director, said the revocation of the lease had far reaching economic and social consequences to several people in the western region like employees who will definitely lose their jobs, as well as farmers.

Lawyer Jackline Kimeto, who is also a creditor, however, opposed the application saying KCB and Sarrai had not approached the court with clean hands. She said they had all along deliberately failed to comply with several court orders and that granting the prayers sought would be used as a shield to perpetuate illegal activities and disobedience of court orders.

Ms Kimeto said suspending the decision and allowing Sarrai to re-enter the premises of Mumias and continue with activities based on a nullified lease poses more irreparable harm, substantial loss to all other stakeholders, in the event that the nullification is upheld by the court of appeal.

Last week, Justice Wilfrida Okwany who was hearing a contempt of court application against Sarrai Group for going on with operations at the company, withdrew from the case citing several reasons, including her transfer from the Commercial division.

Her withdrawal follows that of the presiding judge of the division Justice Mabeya, who disqualified himself from the case in July. The file will be taken to Justice Mabeya who will pick another judge to hear the application.

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Kenya Power to spend $331,000 in pilot transition to electric vehicles

State-owned Kenya Power has said it has started the process of phasing out vehicles that run on fossil fuels for electric ones as a way of adopting “sustainable ways of doing business.”

The company, mandated to distribute electricity to final retail consumers in the country, said in a statement on Tuesday that it has set aside $331,372 in this financial year to facilitate the pilot stage of the transition.

This first stage will involve the purchase of three electric vehicles, two pick-ups and one four-wheel-drive, and the construction of three electric vehicle charging stations in Nairobi, to be used by the company and for demonstration to the public.

According to the statement, Kenya Power has already invited bids for the construction of an e-mobility network infrastructure system (Enis) for the initial charging stations, which will allow payment through mobile money and credit cards.

Acting Managing Director Geoffrey Muli said the company is initiating this transition as a demonstration of its commitment to “substantially reduce its carbon footprint,” adding that they will also purchase electric two-wheelers and three-wheelers for its operations.

“We must play our rightful role to combat global warming by championing mitigation measures such as adoption of electric motorisation,” he said.

Mr Muli was speaking at the Swedish Embassy in Nairobi during the launch of electric two-wheelers, produced by Swedish firm Roam Motors, which are being introduced in the Kenyan market.

He said Kenya Power will purchase 50 such electric motorcycles in the medium term.

“The company has also established a liaison office, which acts as our one-stop shop, to champion the company’s e-mobility business,” Kenya Power said in the statement. “Through this office, Kenya Power is working with other stakeholders to support the development of the e-mobility eco-system.”

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Dar, Mombasa in race to attract more cargo business

Dar es Salaam and Mombasa, the largest ports in East Africa, are in a race to attract more sea bound cargo and imports into the region.

While Dar projects to handle 30 million tonnes by 2030, its competitor, Mombasa, is undergoing expansion to increase its capacity to 47 million tonnes.

Read: Competition from new East Africa ports boon for importers

These emerged during a visit by the board members of the East African Business Council (EABC) to Tanzania’s largest port, which last year handled 17.03 million tonnes.

“We envision to boost capacity to 30 million tonnes by 2030,” said the director general of Tanzania Port Authority (TPA) Plasduce Mbossa during the Friday visit.

TPA has set up a One Stop Centre at the Dar port housing import and export agencies to boost capacity. The logistics centre will improve the Dar es Salaam port performance, he said during a briefing to board members led by chairperson Angela Ngalula.

Read:Kenya seeks to regain fuel business from Dar with its new reserve in Mombasa

The board members visited the port for updates on trade facilitation activities at the Dar port, which has undergone various improvements recently.

The Dar port serves land-locked countries—Malawi, Zambia, Democratic Republic of Congo (DRC), Burundi, Rwanda and Uganda—and also handles more than 80 percent of cargo destined for inland Tanzania.

The port’s main competitor in the East African Community (EAC) bloc is Kenya’s Mombasa port, which also serves Uganda, South Sudan, Rwanda and other landlocked countries.

Read: Kinshasa enters shipping business, set to rock EA boats

According to information contained in its website, the Mombasa port is currently undergoing expansion to raise its capacity to 47 million tonnes by 2030.

Kenya has also given incentives to other states, including the Democratic Republic of the Congo, to keep doing business using the Mombasa port.

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Uber, Bolt drivers in Kenya stage go-slow over commissions

Taxi drivers signed on to the Uber Kenya and Bolt platforms on Monday staged a go-slow in a move to push the firms to lower the commission charged on their fees.

The industrial action came just days after the new regulations to cap the commission charged by taxi-hailing firms at 18 percent took effect—which have been challenged in court by Uber, which maintains that the move will restrict flexibility on its revenue model, and stifle the ability to negotiate suitable commissions that will affect its investment, demand and competition.

Read: Bolt switches to corporate clients only in Tanzania

A section of the drivers told the Business Daily on Monday they were not accepting rider requests from the two apps in areas such as Eastlands, Kasarani, Nairobi CBD, Waiyaki way, and Kilimani area.

“We are asking Uber and Bolt to obey the law. Regulations were supposed to take effect on September 22. This is the backbone of our strike which has started today morning,” said Zachariah Mwangi, chairman of Organisation of Online Taxi Drivers and Digital Taxi Association of Kenya.

“The other problem we have is we don’t determine prices, the companies do. We are still operating with the same price when fuel prices were at Ksh97 ($0.80).”

Fuel costs in Kenya have shot up with petrol retailing at Ksh179.3 ($1.49) a litre and diesel at Ksh165.82 ($1.37) in Nairobi.

Read: Uber suspends operations in Tanzania pending ‘deal with authorities

Also read: Tanzania says Uber, Bolt agree to resume services

Uber Kenya told Business Daily it was aware of the go-slow by some drivers, and that it would continue engaging them on their concerns.

“We are aware that a small group of e-hailing drivers plan to go offline (not using the app). We respect drivers as valuable partners with a voice and a choice and we want drivers to feel they can talk to us about anything at any time,” the firm said.

“However, drivers are diverse in how they use the Uber app and it would be difficult for an individual or group to holistically represent every driver on the app.”

Read: Auctioneer’s hammer to fall on Uber cars

The National Transport and Safety Authority (NTSA) in June 20 published regulations putting the ceiling on commission charged by digital taxi operators in the country on drivers at 18 percent per trip.

The law was expected to take effect three months after the notice, as a move to cushion thousands of drivers who for years have cried out on declined earnings.

Also read: Uber taxi wars in Kenya highlight tax loopholes in charging technology

Uber, however, filed a petition with the High Court to suspend the regulations.

Uber charges 25 percent commission per single ride, while Bolt and Little platforms charge 20 percent and 15 percent, respectively.

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Uganda’s Ebola death toll hits 23

The death toll in Uganda resulting from the Ebola Sudan strain has reached 23, health officials have said.

Read: Ebola infections, deaths rise in Uganda

Mr Emmanuel Ainebyoona, the senior communications officer, said the latest situation report indicated that as of Monday the country has a cumulative 36 cases of Ebola, 18 of which are confirmed and the other 18 are probable.

“The deaths stand at 23, five confirmed and 18 are probable. In the last 24 hours, we registered two new cases and two more deaths,” he said.

Read: Uganda closes clubs, limits gatherings to curb Ebola spread

The Ebola taskforce officials in Mubende District, the epicenter of the outbreak, revealed that five out of the deaths have occurred at Mubende Regional Referral Hospital where they have set up an isolation centre, while the other cases were registered from the community.

Ms Rose Mary Byabasaija, the Resident District Commissioner (RDC) and head of the area Ebola taskforce, on Monday said that while the number of admissions at both the emergency and isolation facilities stands at 38, the confirmed cases are 16.

“It is unfortunate that we have a positive case among the seven people that escaped from the isolation facility at Mubende Hospital. We have now got clues that will possibly help us get the woman that escaped from the facility. Both the security and health surveillance teams are tracking down the escapees,” she added.

Read: Focus on prevention, no vaccine for rare Ebola strain, Uganda told

The taskforce has also beefed up security at Mubende Hospital to ensure that all Ebola cases are isolated from the surrounding community to prevent spread of the disease.

“We have requested for extra deployment from police at the hospital,” the RDC said.

Meanwhile, a spot check in public places such as markets in Mubende revealed that many people are not heeding to the government’s calls to take measures to prevent the spread of the Ebola virus. Most shops did not have hand washing facilities.

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The death toll in Uganda resulting from the Ebola Sudan strain has reached 23, health officials have said. Read: Ebola infections, deaths rise in Uganda Mr Emmanuel Ainebyoona, the senior communications officer, […]

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Kenya quashes order on compulsory use of SGR for cargo transport

Traders can now clear their cargo at the Port of Mombasa and choose the mode of transport to Nairobi and the hinterlands after Kenya Ports Authority (KPA) reverted custom services to the coastal city in line with a presidential decree.

KPA has issued a notice to quash a 2018 notification banning the nomination of cargo to Mombasa and compulsory use of the standard gauge railway (SGR) for ferrying cargo.

“This is, therefore, to notify all shipping lines that importers’ documentation of place of clearance and mode of transport for their goods shall be at their choice,” acting KPA Managing Director John Mwangemi said in the notice on Monday.

“Shipping lines are hereby advised to facilitate importers’ nomination of place of clearance, including port clearance, Kenya Revenue Authority’s licensed container freight stations (CFSs) and KPA’s inland container depots (ICDs). This notice supersedes the notice of 6th June 2018 on similar subject,” KPA said.

Shippers’ take

The Shippers Council of Eastern Africa (SCEA) chief executive Gilbert Lagat said the notice has ended confusion on the implementation of the presidential directive.

“This is very clear. We are happy with the directive. The place and choice of mode and place of clearance rest with the shipper. This is what we had been pushing for to allow cargo clearance and delivery to compete on efficiency, predictability and cost-effectiveness,” said Mr Lagat.

He added, “rail, road, port, CFSs and ICDs will compete on level ground. We expect the cost to respond to market dynamics as it is a win-win for all.”

President William Ruto issued a directive a fortnight ago ordering that all cargo clearance be reverted to Mombasa port.

Cargo transporters had been protesting the directive by former President Uhuru Kenyatta to ferry their goods to Nairobi or Naivasha via the SGR for onward clearance, saying it had raised the cost of doing business, with the costs passed on to consumers.

Kenya Transport Association chairman Newton Wang’oo said SGR should compete with roads on an equal opportunity basis, which will ultimately lower the cost of transport and improve services.

“This is a positive move. We have been fighting against forced rail age. Let us looks out for the implementation of the directive on the ground,” said Mr Wang’oo.

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TotalEnergies walks a tightrope as fresh hurdles threaten to delay pipeline project

International oil major TotalEnergies will on October 10 answer to charges of environmental and human rights abuse before the European Union parliament in Brussels in a new threat to the actualisation of its East African Crude Oil Pipeline (Eacop) and related upstream oil projects in Uganda’s Lake Albert region.

The European parliament has summoned chief executive Patrick Pouyanné to Brussels to justify the project that the lawmakers denounced last week.

He will appear before the parliamentary Committee on Environment, Food and Natural Resources, as well as that of Human Rights. The outcome will determine how the company navigates this latest crisis.

Hit by opposition from environmentalists on one side and beleaguered by financiers on the other, Total is now walking a tightrope as it pushes ahead with the Eacop.

Last week, the European Union parliament passed a resolution calling for the French oil major and its joint venture partners to delay the projects by one year, to address environmental and human rights concerns.

That decision was dismissed by Ugandan President Yoweri Museveni who said the country will look for alternatives if Total obeys the European Parliament.

The oil company, siding with President Museveni, has also vowed that the projects – now in the development phase – will not be halted.

As Total pondered how to navigate this crisis, President Museveni was on a warpath with the company, whose 62 percent stake makes it the biggest shareholder in Eacop. Uganda National Oil Corporation (UNOC) and Tanzania Petroleum Development Corporation own 15 a percent stake each, with China National Offshore Oil Corporation (CNOOC) owning eight percent shareholding.

First, while meeting ruling party MPs’ caucus on September 16, the president warned that should TotalEnergies cave in to pressure from the EU parliament and halt Eacop or pull out of the project agreement, he is ready to drag them to the international court of arbitration.

He later tweeted dismissing the EU parliament’s resolution but more significantly, he fired a warning shot at the French oil giant.

“We should remember that TotalEnergies convinced me about the pipeline idea; if they choose to listen to the EU parliament, we shall find someone else to work with,” read the tweet on September 16.

Total is a corporate citizen of the EU and could be swayed by the lawmakers.

However, it is obvious that the EU parliament’s resolution has shaken government officials in Uganda’s ministry of Energy, as well as those at TotalEnergies and the Eacop Company, who have all previously been very economic with information. They are all now scrambling to volunteer information about the project, either through media briefing or on their websites.

For example, the Eacop Company this week uploaded on its portal the status of compensation of project affected persons (PAPS) – a key tenet on which the EU censure is partly based, as well as the environmental and social impact assessment.

Before the Brussels resolution, this information was not available.

Displaced persons

With construction slated to start by end of this year, only 331 out of a total of 9,513 Eacop’s PAPs in Tanzania will be physically displaced and have been selected for replacement housing, but the website says “construction of these houses is ongoing” without giving completion timelines.

In Uganda, out of 3,648 PAPs, only 203 will be physically displaced, and majority of these have elected for replacement housing. These too are under construction according to the website, but no completion dates are given.

The EU parliament resolution puts the figure of those affected at more than 100,000 – mainly farmers, who are already being displaced from their lands without prior and fair compensation, a number that the resolution also quotes as putting communities at imminent risk of displacement.

Uganda government agencies are also sweating to dispel claims that Eacop will cross numerous protected ecosystems, which will be impacted by the heated pipe operating at 50 degrees Celsius. Officials counter that there only five small rivers and out of the 1,443km of the pipeline, only eight percent is a forest reserve.

Protected areas

The EU resolution called for an end to the extractive activities in protected and sensitive ecosystems, including the shores of Lake Albert, referring to the 132 wells that Total plans to dig into the Murchison Falls National Park.

“They will find it very hard to navigate past this,” said Omar Elmawi, co-ordinator of the Stop Eacop campaign, a network of organisations opposed to the project.

“This project has many problems. The biggest amongst them is the human rights violations,” he added.

EU parliament resolutions often bite those targeted if the European Council, the arm that implements policy, adopts them. So far, the council has said little.

TotalEnergies has kept a brave face in the face of the EU parliamentary resolution’s far reaching ramifications, which could put on hold the $10 billion investment.

The project was signed off in February this year by TotalEnergies with joint venture partners CNOOC and Uganda National Oil Company.

Since the resolution was passed on September 15, the French oil giant has played the sovereignty card, tweeting that Uganda and Tanzania are sovereign states that have made the strategic choice to exploit their natural resources to contribute to the development of their countries, and as such, are not bound by resolutions of the EU parliament.

“TotalEnergies recalls the significance of the Lake Albert/Eacop project for Uganda and Tanzania, and we shall do our utmost to ensure the project is carried out in an extremely exemplary manner in terms of transparency, shared prosperity, social and economic progress and sustainable development, including the environment and respect for human rights,” said Pouyanné.

“The EU resolution to stop the construction of pipeline is not binding on all nations in the world, Europe, European Commission or even a sovereign country like Uganda or Tanzania,” said Ali Ssekatawa, the director of Legal and Corporate Affairs at the Uganda Petroleum Authority.

“The progression of our project will go ahead, and even rigs that are needed to extract oil have reached Mombasa, and efforts are underway to bring them to Hoima and Buliisa so that they start operating,” Ssekatawa added.

Sticking with schedule

Indeed, executives of TotalEnergies and state-owned UNOC say the projects will proceed according to schedule, with site preparation for the two upstream oil production infrastructure at Kingfisher and Tilenga currently underway.

The joint venture partners – TotalEnergies, CNOOC and UNOC – target commercial production of oil and gas in 2025, and are prepared to defy EU calls to delay the project.

The projects main infrastructure is a $5 billion 1,443km long pipeline from Hoima in western Uganda to the Tanzania port of Tanga.

The EU resolution piles on a series of financial and reputational crises that Eacop faced as well as protests in several cities over the project. There were also delays and postponement due to tax disputes between Uganda and TotalEnergies.

For instance, the shareholders were expected to announce financiers that would put in the project’s debt financing before end of July 2022, according to Peter Muliisa, the chief legal and corporate affairs officer at UNOC.

But UNOC chief Proscovia Nabbanja says the shareholders are yet to reach financial close for the project and are still raising equity contributions, which will make up 40 percent of the required $5 billion, while the remaining chunk is debt financing, which “is proceeding as planned.”

She revealed that all International Finance Corporation standards on the environmental and social impact assessment, land acquisition process and technical standards – which are key to obtaining financing – have been achieved and verified by independent auditors hired by lenders.

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KCB to finalize purchase of Congo lender by year end

KCB Group expects to finalise the acquisition of Democratic Republic of Congo lender Trust Merchant Bank (TMB) by the end of the year after receiving shareholder approval for the transaction.

The tier-one lender said the shareholders’ nod at an Extra Ordinary General Meeting (EGM) held in Nairobi on Wednesday will see it accelerate the acquisition, which it first revealed last month.

KCB, which already has operations in Rwanda, Burundi, Tanzania, Uganda, and South Sudan, wants to acquire an 85 percent stake in TMB and plans to buy the remaining shares within two years.

Read: EA’s top banks scramble for a piece of Congo’s market

The deal will be priced at 1.49 times the book value or net assets of the DRC lender, which as of the end of 2021 stood at Ksh14.15 billion. This would value the takeover at Ksh17.9 billion at this multiple.

“The approval of the transaction demonstrates the confidence our shareholders have in the financial and strategic benefits of the transaction and the value it provides our regional clients and communities,” said KCB Group CEO Paul Russo.

“The transaction is expected to close before the end of the year, subject to regulatory approvals and other customary closing conditions.”

The deal will see KCB go to head-to-head with Equity, which entered the DRC in 2015 through a buyout of ProCredit Bank and increased market share in 2020 after acquiring another lender– Banque Commerciale du Congo (BCDC).

TMB is one of DRC’s largest banks, with Ksh181.5 billion ($1.5 billion) in total assets. The lender, which is headquartered in the DRC’s second largest city Lubumbashi, began operations in 2004.

As of June last year, the lender commanded an 11 percent market share in the DRC, having established 109 branches in the country and a representative office in Belgium.

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KCB Group expects to finalise the acquisition of Democratic Republic of Congo lender Trust Merchant Bank (TMB) by the end of the year after receiving shareholder approval for the transaction. […]

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East Africa exporters brace for impact as Suez Canal tolls rise

The increase in transit tolls for ships passing through the Suez Canal by 15 percent is likely to impact exports to Europe from the region, the shippers warned.

Egypt has raised the fees for all vessel types, except bulk and cruise ships, whose fees will increase by 10 percent from next year.

Suez Canal Authority chief Osama Rabie said in a statement that the increment will take effect from January 1, 2023.

The authority cited rising energy prices, freight rates, and daily charter rates for ships, which are predicted to continue next year.

“The (tolls) increase is inevitable and is a necessity in light of the current global inflation, which translates into increased operational costs and the costs of the navigational services provided in the canal,” said Mr Rabie.

The key waterway connecting the Red Sea and the Mediterranean accounts for nearly 10 percent of global maritime trade.

The Shippers Council of Eastern Africa (SCEA) chief executive Gilbert Lagat said exports from East Africa destined to Europe would be the most affected.

“East Africa depends on most of its imports from Asia, which uses an alternative channel, whereas goods being exported from the region have to pass through the Suez Canal. This will complicate export, and some ships might opt to change their destinations considering the economies of scale,” said Mr Lagat.

He added, “We hope as shippers we shall come up with solutions or renegotiate with the authority for better rates.”

Exports to Europe from the region are mainly agricultural commodities such as coffee, tea, tobacco, cut flowers, fruits, vegetables and fish. Others are textile and clothing, and handicrafts, among others.

The Suez Canal is the main route used by vessels from Europe to the East African ports.

Daily charter rates for crude oil tankers increased on average in 2022 by 88 percent compared to 2021, while daily charter rates for liquefied natural gas (LNG) carriers rose on average by 11 percent during this year compared to the year earlier.

Mr Rabie said the current increased energy prices also impacted the authority’s fees calculations.

“The continued rise in crude oil prices above the level of $90 per barrel and the rise in the average prices of LNG above the level of $30 per million thermal units have led to a surge in the average prices of ship bunkers,” he said.

Consequently, there was an increase in the savings that ships achieve by transiting through the Suez Canal compared to other alternative routes, he explained.

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The increase in transit tolls for ships passing through the Suez Canal by 15 percent is likely to impact exports to Europe from the region, the shippers warned. Egypt has raised […]

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Kenya exports to Uganda drop as rest of EAC soar

Kenya’s exports to Tanzania grew the sharpest among all East Africa Community (EAC) markets in the six months to June, new data shows, outshining the country’s slumped performance in its top trading destination, Uganda.

Statistics by the Central Bank of Kenya shows Kenya’s exports to Uganda dipped 8.5 per cent to Ksh46.77 billion ($386.3 million) during the half year compared to a similar period in 2021—breaking a growth trend in all EAC markets including Tanzania, Rwanda, and South Sudan.

Kenya’s exports to Tanzania jumped the highest by 46 per cent to Ksh28.66 billion ($236.7 million) extending a good trade run between the pair amid ongoing elimination of non-tariff barriers. There was a 39 per cent growth in Kenya’s exports to Rwanda in the half year to June to hit Ksh19.28 billion ($159.2 million). Kenya’s exports to South Sudan were up 34.11 per cent to Ksh13.73 billion ($113.4 million) in the period.

Although Uganda remains Kenya’s main export market, frequent trade tiffs over items such as sugar, eggs and milk have often soured trade. For instance, in June Uganda accused Kenya of sparking a fresh trade row by reintroducing a levy on eggs from the neighbouring country.

Uganda said Kenya is now taxing its eggs at a rate of Ksh72 ($0.59) a tray, bringing back a levy that had been suspended last December following bilateral talks between Kampala and Nairobi. The latest row came at a time when the two countries are yet to resolve a long-standing dispute on milk after Kenya barred Uganda’s dairy products in 2019.

Kenya had in the last two years restricted exports of poultry and dairy products from Uganda, straining the relationship between the duo. The issue on poultry was resolved after Uganda threatened to ban Nairobi from exporting its goods to the landlocked neighbor. In 2020, Kenya barred sugar from Uganda and sugarcane, costing traders who were exporting the raw material to sugar mills billions of shillings as the crop was left to rot on trucks at the border.

Contrastingly, Kenya’s trade with Tanzania has grown steadily in the past years in the wake of improved relations between the two countries after years of feuds that at one point resulted in retaliatory measures such as trade bans.

Retired President Uhuru Kenyatta and his Tanzanian counterpart, Samia Suluhu ended persistent strained trade ties between the two largest economies in the six-nation EAC bloc which have, for years, hindered the smooth flow of goods and services.

Data by the KNBS shows that the value of Kenya’s exports to Tanzania jumped 43.39 percent to Ksh45.6 billion ($376.6 million) in 2021 compared to the previous year. Tanzania’s exports to Kenya on the other hand grew 95.3 percent last year—nearly double-to Ksh54.47 billion ($449.9 million) last year.

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Kenya’s exports to Tanzania grew the sharpest among all East Africa Community (EAC) markets in the six months to June, new data shows, outshining the country’s slumped performance in its […]

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Kenya's President William Ruto. PHOTO | FILE

Ruto pursues ‘new partnerships’ with US investors

Kenya’s President William Ruto says he is seeking to improve the bilateral trade relations with the US and establish “new relationships and strategic partnerships” with American businesspeople in his efforts to improve the country’s economy.

According to a statement by State House, the president, who is currently in New York city for the United Nations General Assembly, was hosted to a “high-level business roundtable” by the US Chamber of Commerce, a lobby representing American businesses and organisations.

“Participants explored ways in which the US business community can partner with Kenyan industries to achieve the President’s vision and development agenda,” the dispatch reads.

Dr Ruto said Kenya is ready for investments and that the partnerships with American businesses will help improve the country’s economic and social transformation.

“Investors can predict the future of Kenya because it’s a democratic country. We have demonstrated as the people of Kenya that the rule of law underpins public affairs,” he said.

The president also held separate talks on fertilizer production and green energy “to enhance agricultural production, create jobs and develop a more resilient economy,” but State House didn’t specify the attendees of this meeting.

President Ruto had vowed to reduce the cost fertiliser by nearly half during his inauguration on September 13, highlighting this as one of his administration’s key priorities and a strategy to bring down the cost of living in the country.

He also said his government “commits to create a business-friendly environment, eradicate barriers that hamper business development and growth, and make Kenya one of the most compelling and attractive business destinations.”

The US is the second leading destination for Kenyan exports, with data from the World Bank estimating that Nairobi exported about $509 million worth of goods to the US between 2015 and 2019, accounting for 8.7 percent of all exports.

Ruto was also the chief guest at the Africa Investment Partnership Forum organised by the United Nations Development Programme, in which “discussions centred on moving Africa from aid to investment.”

President Ruto is scheduled to address the 77th UN General Assembly on Wednesday at around 9pm EAT, before returning to Kenya where he is expected to announce his new cabinet.

DRC’s President Félix Tshisekedi already addressed the assembly on Tuesday, while Rwanda is scheduled for Wednesday, and Uganda, Burundi and Tanzania are slotted for Thursday.

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Kenya’s President William Ruto says he is seeking to improve the bilateral trade relations with the US and establish “new relationships and strategic partnerships” with American businesspeople in his efforts […]

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South Sudan, Djibouti plan to lay fiber optic to Juba

South Sudan and Djibouti have signed an agreement to lay fibre optic cable from Djibouti through Ethiopia to the capital Juba.

The Ministry of Information, Communication Technology and Postal Services said the government and Djibouti officials would form a technical team to deliberate on the project, after they signed a memorandum of understanding on Monday.

The deal was inked by the Minister of Information Michael Makuei Lueth and senior officials from Djibouti.

Read: Internet down in South Sudan due to ‘technical problem’: minister

South Sudan said it is also working closely with the World Bank to connect the country with another fibre optic cable from Kenya. The deal was signed in 2015.

The country gained independence from Sudan in 2011 but years of civil war have denied it infrastructure to offer high speed Internet connections.

The country aims to link its citizens with the rest of the world as well as cut the high cost of using the internet.

Read: South Sudan youth look at a future driven by tech

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South Sudan and Djibouti have signed an agreement to lay fibre optic cable from Djibouti through Ethiopia to the capital Juba. The Ministry of Information, Communication Technology and Postal Services […]

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Kenyan students win $1 million prize for business innovation

A team of students from Kenya’s St Paul’s University last night won the global finals of the 2022 Hult Prize for their business innovation.

Competing in the finals as Eco-Bana Ltd, the students beat five other finalists and were awarded $1 million to boost their business. 

Eco-bana Ltd is a start-up that makes biodegradable sanitary pads using banana fibre. The idea aims to stop plastic manufacturing by providing biodegradable sanitary pads to end period poverty.

The team comprises Lennox Omondi, Keylie Muthoni, Dullah Shiltone and Brian Ndung’u. The event was held during the Clinton Global Initiative Annual Meeting in New York City, US. Former US President Bill Clinton delivered the keynote address.

“The Hult 2022 Prize was such a joyful celebration of innovation and sustainability in business. All our finalists did incredible pitches today, but there could only be one winner. Huge congratulations to Eco-Bana Ltd,” Hult Business School said in a tweet.

Muthoni, however, did not make it to New York due to a visa hitch.

“With $1 million, we’re confident that we will be the best and become number one producers of biodegradable sanitary towels in Kenya and East Africa,” Mr Omondi told Daily Nation in an interview before they left for the finals.

He doubles up as the chief technical officer of the company. He is a third year student of mass communication, public relations and marketing.

“Today, at exactly 1.58 pm New York time, Eco-Bana is here to ask for one million dollars to make our dreams come true. We predict to sell more than three million pads, generating over $50 million and employ more than 2,000 people by 2024,” Mr Ndung’u said during their pitch. 

The company has already introduced the product in the market and plans to expand to the Egyptian market have started.

Mr Omondi revealed that for mass production, they need heavy duty machines which are costly.

Muthoni is the chief operations officer, while Shiltone and Ndung’u work as the chief financial officer and the marketing officer respectively. The students entered into the final after winning the regional summit in May in Johannesburg and emerging position two in the Global Accelerator in Boston, Massachusetts in August.

“We’re a team with a mind for business and a heart for the world. We’ll continue creating sustainable enterprises that will shape the future of the sanitary towels industry that will drive entrepreneurship growth,” Mr Omondi said.

The five other finalists are Breer from Hong Kong, Savvy Engineers from Pakistan, Openversum from Switzerland, Cooseii from Taiwan and Flexie from Australia. The six teams are the winners of each of the regional summits.

“At the point where I was founding the company, I had difficulties balancing with my studies. With proper guidance from my mentor, I’ve learnt how to balance by creating a weekly study plan and a work plan. That way, I’m able to know when I have to leave the office and go to class or do my assignments and still get to be with my friends and team mates,” Mr Omondi said.

His goal is to study for a masters degree at the University of Oxford.

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A team of students from Kenya’s St Paul’s University last night won the global finals of the 2022 Hult Prize for their business innovation. Competing in the finals as Eco-Bana Ltd, the […]

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Shelter Afrique approves $18m loan for DRC housing projects

Pan-African housing financier Shelter Afrique has approved an $18.5 million corporate loan to a Democratic Republic of Congo-based developer for three housing projects.

The five-year facility is part of “urban regeneration,” the lender said Tuesday and is the third credit line for the company since 2016.

The Katanga-based Maison Super Development (MSD) is building office blocks in the southern city of Kolwezi and southeastern Lubumbashi, the third-biggest DRC city, where it is also putting up a housing project.

“Lubumbashi and Kolwezi are two cities gradually being transformed into major cities in the DRC,” said Shelter Afrique acting managing director Kingsley Muwowo, adding that the funding makes it easy to “create a mix where both affordable housing would exist with commercial spaces to spur business activities and employment.”

“We are grateful for the partnership, which will enable us to change the face of Lubumbashi and Kolwezi one housing unit at a time,” said Dharmendra Kumar, MSD’s managing director.

Shelter Afrique has been ramping up its activities in DRC through public-private partnerships and equity investments in large-scale, low-cost housing projects. It also injected $11.4 million into a lender for mortgage financing.

The financier has been seeking to invest in lower-cost projects across its 40 member states in the continent. Early this year, it launched a ‘housing affordability calculator’ to vet proposals pitched by developers.

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Pan-African housing financier Shelter Afrique has approved an $18.5 million corporate loan to a Democratic Republic of Congo-based developer for three housing projects. The five-year facility is part of “urban […]

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Tanzania scraps levy on electronic transactions after outcry

Tanzania has scrapped the recently introduced levies on electronic transactions following public outcry.

The decision was announced by the Minister of Finance and Planning, Dr Mwigulu Nchemba, in Parliament on Tuesday when he was responding to questions from the legislators.

The government imposed the levy in July this year on bank withdrawals done over the counter, ATMs and interbank transfers and mobile wallets.

“The amendments made are to cancel the levies for transferring money from banks to mobile networks (both sides) and for transferring money within one bank,” he said.

Dr Nchemba said that the new changes would take effect on October 1.

He said the move aims to reduce the scope of charges, stimulate cash transactions, simplify levies and prevent double taxation.

The government has also cancelled levies on electronic money transfers from one bank to another.

Transaction fees for cash withdrawal through bank agents and ATMs for amounts not exceeding Tsh30,000 ($12.87) have also been waived.

At the same time, the government has abolished withholding tax on rental properties collected from tenants and instead returned the responsibility to the Tanzania Revenue Authority (TRA).

“I would like to emphasise that the withholding tax is not for the tenant but should be paid by the landlord who receives income from investment or rental business,” he said.

Dr Nchemba ordered the collected monies refunded from government expenditure savings so as not to affect services and development projects.

“Let’s cut tea, snacks, domestic and foreign trips for the officials of our ministries as the President (Samia Suluhu Hassan) has instructed. Let’s cut training, seminars, concerts, workshops,” he said.

“The government expected to collect approximately Tsh500 billion ($213.51 million) shillings from mobile and bank transactions levies,” said Dr Nchemba.

Tanzanians have been decrying the high costs, with businesses saying they have witnessed a decline in online purchases as people avoid electronic transactions.

The outcry led President Suluhu to direct a review.

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Tanzania has scrapped the recently introduced levies on electronic transactions following public outcry. The decision was announced by the Minister of Finance and Planning, Dr Mwigulu Nchemba, in Parliament on […]

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S. Sudan plan to build harbor in Djibouti to hurt Kenyan port

South Sudan has bought a piece of land in Djibouti for the construction of a harbour in its latest effort to find an alternative to the port of Mombasa which is facing an onslaught from Dar-es-Salaam.

South Sudan has bought three acres of land at the port of Djibouti for the construction of a facility that will handle its import and export goods as Juba seeks to cut reliance on the Mombasa port in Kenya.

The latest development comes just two months after the Chamber of Commerce in South Sudan said it will shift its cargo to the port of Djibouti, which it termed as convenient for the Africa’s youngest State.

“We have been only using Port Sudan and Mombasa but recently, we have decided to go to Djibouti and as I am speaking to you, we have land in Djibouti,” South Sudan Minister for Petroleum Puot Kang Chol is quoted by local media.

The minister said the land was procured by the Ministry of Petroleum for the purpose of exporting the country’s crude oil as well as use it on imported goods. If effected, the move will hit the port of Mombasa given that Juba is one of Kenya’s largest clients.

Mombasa has been the main route for all consignments destined to the landlocked country with South Sudan importing nearly all of its cargo through the Kenyan port.

Mr Chol said they were ready to facilitate and stock goods destined for South Sudan through Djibouti.

“If any of you have goods, and you want to bring them through Djibouti, we have a land, we will have a space for you to accommodate your materials [or] whatever you want to bring,” said the official.

South Sudan is the second country in terms of cargo throughput volumes at the Mombasa port after Uganda, accounting for 9.9 percent of transit volumes. Uganda accounts for 83 percent of all throughput cargo followed by the Democratic Republic of the Congo, Tanzania and Rwanda at 7.2, 3.2 and 2.4 percent in that order.

Kenya Ports Authority managing director John Mwangemi said South Sudan is one of their largest clients but they can choose a preferred facility. “I am not aware of the development in South Sudan but the government there can make a choice on which port to use,” said Mr Mwangemi.

The announcement by South Sudan comes just a few days after President William Ruto issued a directive for all inbound cargo to be cleared in Mombasa, dealing a blow to the Inland Container Depot (ICD) in Naivasha.

Kenya allocated South Sudan land in Naivasha for the construction of a dry port, which would see goods destined to Juba cleared at the ICD facility to save truckers the long journey to Mombasa. Kenya has also allocated a piece of land to Uganda to clear its goods in Naivasha.

Dr Ruto promised during the election campaigns to return the port services to Mombasa if elected as President in the August election.

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South Sudan has bought a piece of land in Djibouti for the construction of a harbour in its latest effort to find an alternative to the port of Mombasa which […]

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Kenyan firms hit as Microsoft, Google talent war raises pay

Local Kenyan companies are struggling to recruit and retain key talent as US tech titans, led by Microsoft, Amazon and Google, tilt the market in their favour with high salaries and attractive employment terms.

The three multinationals have increased their presence in East Africa with Kenya as their hub, triggering an aggressive hiring spree that has seen them pay up to Ksh1.8 million ($15,037) monthly for principal tech specialists.

The multinationals are also paying around Ksh300,000 ($2,506) to junior tech developers, Ksh500,000 ($4,177) for mid-level techies and between Ksh800,000 ($6,683) and Ksh1.3 million ($10,860) for lead and senior roles.

Smaller companies in the area such as Wasoko, Flocash, Twiga foods, Lori Systems, and Sendy, who had invested in and trained young engineers, have been swiftly outbid.

But while the talent war is resulting in higher compensation for Kenya’s techies, it is disrupting the business plans for local firms and smaller foreign technology companies.

Major telcos and banks, long considered the best-paying organizations for techies in Kenya, are also losing their top talent to Big Tech.

“You know, what’s happening in this market across all of us. We have some people called Microsoft, Amazon, Google who are just mopping up our developers,” said Patricia Ithau, the chief executive officer of WPP Scangroup.

“We have a programme we recruit from the university two, three months, they come in from college, and you offer them a hundred. Google tells them two hundred, there’s nothing you’re going to do. They’re going to go. And then they go from Google. Microsoft offers them three hundred, they’ll move. So until we start creating a lot more talent, it is the way of the world.”

Global tech giants have been increasing investment on the continent in recent years to take advantage of growing economies with rising access rates to the Internet by a youthful population.

They are using Kenya, South Africa and Nigeria as their launch pads for a bigger stake of Africa.

Read more here

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Kenya’s new move on SGR to upset China and Uganda

This week’s order by Kenyan President William Ruto to revert cargo clearing services to the port of Mombasa could upset China and Uganda, the port’s biggest clients, and trigger anxiety among major players who depend on it.

The order, issued as President Ruto took office, is set to have far-reaching ramifications.

The key question is what China’s reaction will be, given that Kenya must still meet its end of the bargain on the standard gauge railway (SGR) cargo operation numbers and debt repayments.

But more importantly, will be whether port operations’ efficiency that has currently seen goods reach Uganda in a record four days after being offloaded at the Mombasa port will continue. The shortened time was due to the seamless systems that directly fed the SGR, and onwards to the Nairobi Inland Container depot and the Naivasha dry port.

Kenya’s move also comes as neighbour Tanzania steps up its efforts to connect the Dar es Salaam port with other East African countries through the Central Corridor.

Speaking on Tuesday in his first address to the nation after his swearing-in as the fifth president of Kenya, President Ruto defended his move to undo the policy of his predecessor Uhuru Kenyatta.

He said his actions were aimed at restoring thousands of jobs that had been lost in the logistics sector in Mombasa when former president Kenyatta issued an order for all cargo coming through the port of Mombasa to be hauled by the SGR, and cleared at either Nairobi or the Naivasha Inland Container Depot (ICD).

“This afternoon, I will be issuing instructions for clearance of all goods and other attendant operational issues to revert to the port of Mombasa. This restores thousands of jobs in the city of Mombasa,” said President Ruto on Tuesday. But even as cargo operations are ordered back to Mombasa, the question now is how Kenya will repay the SGR loan considering that the repayments will more than double in the financial year starting this July, when there will be increased payment of principal sums to the Exim Bank of China for the project.

Read: Hard times for Kenya SGR as port operations return to Mombasa

Exim Bank of China funded 90 per cent of the $3.6 billion line from Nairobi to Mombasa.

Kenya’s Treasury projects debt repayments to Exim Bank of China will rise to $800 million in the next financial year, a 126.61 per cent surge from the revised $351.7 million budgeted for this year. Redemptions to the Chinese lender will increase to $605.16 million, from $174.98 million this year. Interest obligations will rise 8.55 per cent to $191.88 million, from 176.7 million, according to Treasury data tabled in the National Assembly.

Set volumes

According to the take-and-pay agreement, the Kenya Ports Authority undertook to consign to Kenya Railways a set volume of freight and cargo in order to collect adequate funds to pay off the SGR loan.

According to the latest data from the Kenya National Bureau of Statistics, in the first six months of this year, SGR recorded a total of $750 million in revenue. Some $610 million was for cargo volumes with revenue for the past five years totalling $4.6 billion. Passenger revenues were $760 million over the same period, an indication that SGR depends on freight to remain afloat.

In December 2019, then-president Kenyatta flagged off a cargo train from Nairobi to Naivasha, marking the start of operations at the Inland Container Depot. Soon after, he issued an order to evacuate onward cargo to Naivasha.

Kenyatta’s administration forced importers to use the SGR to ensure minimum guaranteed business to repay the $3.7 billion debt taken to build it. The directive saw the government transfer goods clearance to Naivasha, and enforced compliance, affecting thousands of workers and companies in the logistics sector in Mombasa.

The move was met by protests from Uganda and South Sudan, which are the main transit users of Mombasa port. They said then that Naivasha lacked adequate cargo handling facilities, thus making the cost of transport to their respective countries more expensive.

Protests

Long-distance cargo transporters also protested the directive, saying the government’s move would raise the cost of doing business, with the costs passed on to the final consumers of the imported goods. They moved to the High Court to have the mandatory directive rescinded and succeeded, but the government, through the KPA, appealed and the directive stood.

To date, an appeal challenging orders quashing the directive requiring all cargo to be transported to Nairobi and the hinterland exclusively through the SGR is yet to be determined by the Court of Appeal.

Last November, the appellate court suspended the execution of orders quashing the directive issued by a five-judge bench of the High Court, pending hearing and determination of the appeal filed by the KPA.

Read: Reprieve for regional importers as court stops SGR rule

KPA argued that the directives were meant to operationalise the take-and-pay agreement, which is key to ensuring the loan for the construction of the SGR is repaid without any hitches.

In his campaign rallies in the run-up to the presidential election, Dr Ruto harped on the fact that the transfer of port operations to Naivasha was against the agreement made during the conception and construction of the SGR.

President Ruto said the Naivasha dry port was put up to benefit a few individuals, and dealt a blow to the economy of Mombasa.

Contrary order

But as the new order to revert cargo clearance to Mombasa takes effect, stakeholders now say it will be a blow to East African countries that use the port, and is contrary to the contract between Kenya and China on how to pay the loan.

“With the latest move by the current government, this means the Naivasha ICD where five EAC countries were last month issued with title deeds by former president Kenyatta, might cease to be lucrative. This means, the investment at the dry port, a facility on more than 1,000 acres, which is estimated to handle two million tonnes of cargo every year, will go to waste,” said Simon Sang, secretary-general of the Dock Workers Union.

“We are asking the government to invest more in Malaba and Busia borders to reduce congestion considering heavy traffic expected in the coming months,” he added.

Most of the cargo handled at the Mombasa port is destined for Uganda, Rwanda, South Sudan, Ethiopia, Burundi and the Democratic Republic of Congo, which accounts for 30 percent of imports and exports through there.

Last month, Kenya concluded the issuance of title deeds to five countries — Burundi, Rwanda, DR Congo, Uganda and South Sudan — to establish dry ports in Naivasha, despite their earlier reluctance to use the dry port as an alternative to Mombasa.

Then-president Kenyatta hosted the title deeds handing-out ceremony in Naivasha, where a special economic zone is being established. Uganda and South Sudan were offered land at the dry port in 2019, and since then have done little by way of putting up the necessary infrastructure such as cargo handling operations because of lack of a title deed as proof of ownership.

Evacuating cargo

 As the President Ruto directive is implemented, shippers say the seamless connectivity from the vessel to SGR to Nairobi or Naivasha reduced congestion, both at the port and also vehicular traffic along the Northern Corridor.

The Shippers Council of Eastern Africa (SCEA) chief executive Gilbert Lagat said the SGR idea was to fully connect port and border towns. This would be via both the SGR and metre gauge railway (MGR) to minimise costs.

Read: Costs, competition drive truckers to innovate

Mr Lagat said the SGR and MGR shortened the time taken to evacuate cargo from Mombasa to Malaba by 62 percent, and costs by 58 percent.

“What importers consider is cost and efficiency. If the consignment reaches on time at the cheapest cost, that is what they will go for. The introduction of the railway is what we have been pushing for as it will give importers an alternative means of hauling their cargo considering bottlenecks associated with the Northern Corridor,” said Mr Lagat.

He added that the new railway had reduced cases of cargo loss as there is less diversion than is experienced with trucks.

The order by President Ruto will also derail Kenya Railway Corporation’s move to improve efficiency by connecting Mombasa and Malaba via rail. Starting this January, cargo from Mombasa port destined for Malaba was to be loaded onto the SGR to Naivasha, from where it would be transshipped onto the MGR line at the Naivasha ICD.

Faster by rail

The freight train and connectivity, if successfully implemented, will take less than 40 hours to ferry cargo from Mombasa to Malaba railway yard compared with by road transport which takes 96 hours. It would also offer a cost reduction to $860 from $2,000 per container charged by road hauliers.

Also by collecting goods from the Naivasha ICD, importers from neighbouring countries will have reduced the distance covered by road hauliers by more than 400 kilometres.

Kenya chose to rehabilitate its 100-year old MGR from Naivasha to Malaba after it abandoned its bid to extend the SGR line to Kisumu, and on to the Ugandan border, after failing to secure a multibillion-shilling loan from China, which had funded the first and second phases of the SGR line.

Kenya Railway managing director Philip Mainga had said that the freight train has the capacity to handle 120,000 containers annually.

In December 2021, KRC gazetted promotional charges to haul cargo from Mombasa to Malaba at $860 for 20-foot container weighing up to 30 tonnes, while that above that cost $960. A 40-foot container above 30 tonnes was charged at $1,100, and those above were charged $1,260 without considering last mile cost. Since 2019, after the introduction of SGR freight train, transporters and container freight owners have been counting losses as all cargo ended up on the freight train to Nairobi and Naivasha.

As a result, container freight stations, which handled up to 95 percent of the cargo offloaded at Mombasa, were left to manage less than 10 percent of Mombasa-destined cargo.

Job losses

According to the Container Freight Stations Association (CFSA), more than 4,000 workers lost their jobs since the launch of the SGR and introduction of the mandatory haulage of cargo by train to Nairobi and Naivasha ICDs.

“We had to let go more than half our workers as businesses struggle. All these job losses have happened at the Mombasa port as a result of the reduction in trucked cargo volumes,” said CFSA chief executive Daniel Nzeki.

Kenya Transporters Association condemned the government’s move to force importers to use the SGR saying it does not want to tell the public the hidden costs of using the cargo train to ferry containers.

“It costs $860 including value added tax to transport a 20-foot container to and from Nairobi using a truck but the SGR costs more than $920,” said KTA chairman Newton Wang’oo.

Kenya International Forwarding and Warehousing Association chairman Roy Mwanthi echoed Mr Wang’oo’s sentiments, saying they now expect business to return to normal.

“The move by President Ruto is commended and now we want the executive order to be implemented immediately,” said Mr Mwanthi.

He added that the Naivasha Inland Container depot will remain a futuristic spot, and that “the government facilities should be left open to those willing to use them, and the government should make them efficient”.

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This week’s order by Kenyan President William Ruto to revert cargo clearing services to the port of Mombasa could upset China and Uganda, the port’s biggest clients, and trigger anxiety […]

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Kenya’s new move on SGR to upset China and Uganda

This week’s order by Kenyan President William Ruto to revert cargo clearing services to the port of Mombasa could upset China and Uganda, the port’s biggest clients, and trigger anxiety among major players who depend on it.

The order, issued as President Ruto took office, is set to have far-reaching ramifications.

The key question is what China’s reaction will be, given that Kenya must still meet its end of the bargain on the standard gauge railway (SGR) cargo operation numbers and debt repayments.

But more importantly, will be whether port operations’ efficiency that has currently seen goods reach Uganda in a record four days after being offloaded at the Mombasa port will continue. The shortened time was due to the seamless systems that directly fed the SGR, and onwards to the Nairobi Inland Container depot and the Naivasha dry port.

Kenya’s move also comes as neighbour Tanzania steps up its efforts to connect the Dar es Salaam port with other East African countries through the Central Corridor.

Speaking on Tuesday in his first address to the nation after his swearing-in as the fifth president of Kenya, President Ruto defended his move to undo the policy of his predecessor Uhuru Kenyatta.

He said his actions were aimed at restoring thousands of jobs that had been lost in the logistics sector in Mombasa when former president Kenyatta issued an order for all cargo coming through the port of Mombasa to be hauled by the SGR, and cleared at either Nairobi or the Naivasha Inland Container Depot (ICD).

“This afternoon, I will be issuing instructions for clearance of all goods and other attendant operational issues to revert to the port of Mombasa. This restores thousands of jobs in the city of Mombasa,” said President Ruto on Tuesday. But even as cargo operations are ordered back to Mombasa, the question now is how Kenya will repay the SGR loan considering that the repayments will more than double in the financial year starting this July, when there will be increased payment of principal sums to the Exim Bank of China for the project.

Read: Hard times for Kenya SGR as port operations return to Mombasa

Exim Bank of China funded 90 per cent of the $3.6 billion line from Nairobi to Mombasa.

Kenya’s Treasury projects debt repayments to Exim Bank of China will rise to $800 million in the next financial year, a 126.61 per cent surge from the revised $351.7 million budgeted for this year. Redemptions to the Chinese lender will increase to $605.16 million, from $174.98 million this year. Interest obligations will rise 8.55 per cent to $191.88 million, from 176.7 million, according to Treasury data tabled in the National Assembly.

Set volumes

According to the take-and-pay agreement, the Kenya Ports Authority undertook to consign to Kenya Railways a set volume of freight and cargo in order to collect adequate funds to pay off the SGR loan.

According to the latest data from the Kenya National Bureau of Statistics, in the first six months of this year, SGR recorded a total of $750 million in revenue. Some $610 million was for cargo volumes with revenue for the past five years totalling $4.6 billion. Passenger revenues were $760 million over the same period, an indication that SGR depends on freight to remain afloat.

In December 2019, then-president Kenyatta flagged off a cargo train from Nairobi to Naivasha, marking the start of operations at the Inland Container Depot. Soon after, he issued an order to evacuate onward cargo to Naivasha.

Kenyatta’s administration forced importers to use the SGR to ensure minimum guaranteed business to repay the $3.7 billion debt taken to build it. The directive saw the government transfer goods clearance to Naivasha, and enforced compliance, affecting thousands of workers and companies in the logistics sector in Mombasa.

The move was met by protests from Uganda and South Sudan, which are the main transit users of Mombasa port. They said then that Naivasha lacked adequate cargo handling facilities, thus making the cost of transport to their respective countries more expensive.

Protests

Long-distance cargo transporters also protested the directive, saying the government’s move would raise the cost of doing business, with the costs passed on to the final consumers of the imported goods. They moved to the High Court to have the mandatory directive rescinded and succeeded, but the government, through the KPA, appealed and the directive stood.

To date, an appeal challenging orders quashing the directive requiring all cargo to be transported to Nairobi and the hinterland exclusively through the SGR is yet to be determined by the Court of Appeal.

Last November, the appellate court suspended the execution of orders quashing the directive issued by a five-judge bench of the High Court, pending hearing and determination of the appeal filed by the KPA.

Read: Reprieve for regional importers as court stops SGR rule

KPA argued that the directives were meant to operationalise the take-and-pay agreement, which is key to ensuring the loan for the construction of the SGR is repaid without any hitches.

In his campaign rallies in the run-up to the presidential election, Dr Ruto harped on the fact that the transfer of port operations to Naivasha was against the agreement made during the conception and construction of the SGR.

President Ruto said the Naivasha dry port was put up to benefit a few individuals, and dealt a blow to the economy of Mombasa.

Contrary order

But as the new order to revert cargo clearance to Mombasa takes effect, stakeholders now say it will be a blow to East African countries that use the port, and is contrary to the contract between Kenya and China on how to pay the loan.

“With the latest move by the current government, this means the Naivasha ICD where five EAC countries were last month issued with title deeds by former president Kenyatta, might cease to be lucrative. This means, the investment at the dry port, a facility on more than 1,000 acres, which is estimated to handle two million tonnes of cargo every year, will go to waste,” said Simon Sang, secretary-general of the Dock Workers Union.

“We are asking the government to invest more in Malaba and Busia borders to reduce congestion considering heavy traffic expected in the coming months,” he added.

Most of the cargo handled at the Mombasa port is destined for Uganda, Rwanda, South Sudan, Ethiopia, Burundi and the Democratic Republic of Congo, which accounts for 30 percent of imports and exports through there.

Last month, Kenya concluded the issuance of title deeds to five countries — Burundi, Rwanda, DR Congo, Uganda and South Sudan — to establish dry ports in Naivasha, despite their earlier reluctance to use the dry port as an alternative to Mombasa.

Then-president Kenyatta hosted the title deeds handing-out ceremony in Naivasha, where a special economic zone is being established. Uganda and South Sudan were offered land at the dry port in 2019, and since then have done little by way of putting up the necessary infrastructure such as cargo handling operations because of lack of a title deed as proof of ownership.

Evacuating cargo

 As the President Ruto directive is implemented, shippers say the seamless connectivity from the vessel to SGR to Nairobi or Naivasha reduced congestion, both at the port and also vehicular traffic along the Northern Corridor.

The Shippers Council of Eastern Africa (SCEA) chief executive Gilbert Lagat said the SGR idea was to fully connect port and border towns. This would be via both the SGR and metre gauge railway (MGR) to minimise costs.

Read: Costs, competition drive truckers to innovate

Mr Lagat said the SGR and MGR shortened the time taken to evacuate cargo from Mombasa to Malaba by 62 percent, and costs by 58 percent.

“What importers consider is cost and efficiency. If the consignment reaches on time at the cheapest cost, that is what they will go for. The introduction of the railway is what we have been pushing for as it will give importers an alternative means of hauling their cargo considering bottlenecks associated with the Northern Corridor,” said Mr Lagat.

He added that the new railway had reduced cases of cargo loss as there is less diversion than is experienced with trucks.

The order by President Ruto will also derail Kenya Railway Corporation’s move to improve efficiency by connecting Mombasa and Malaba via rail. Starting this January, cargo from Mombasa port destined for Malaba was to be loaded onto the SGR to Naivasha, from where it would be transshipped onto the MGR line at the Naivasha ICD.

Faster by rail

The freight train and connectivity, if successfully implemented, will take less than 40 hours to ferry cargo from Mombasa to Malaba railway yard compared with by road transport which takes 96 hours. It would also offer a cost reduction to $860 from $2,000 per container charged by road hauliers.

Also by collecting goods from the Naivasha ICD, importers from neighbouring countries will have reduced the distance covered by road hauliers by more than 400 kilometres.

Kenya chose to rehabilitate its 100-year old MGR from Naivasha to Malaba after it abandoned its bid to extend the SGR line to Kisumu, and on to the Ugandan border, after failing to secure a multibillion-shilling loan from China, which had funded the first and second phases of the SGR line.

Kenya Railway managing director Philip Mainga had said that the freight train has the capacity to handle 120,000 containers annually.

In December 2021, KRC gazetted promotional charges to haul cargo from Mombasa to Malaba at $860 for 20-foot container weighing up to 30 tonnes, while that above that cost $960. A 40-foot container above 30 tonnes was charged at $1,100, and those above were charged $1,260 without considering last mile cost. Since 2019, after the introduction of SGR freight train, transporters and container freight owners have been counting losses as all cargo ended up on the freight train to Nairobi and Naivasha.

As a result, container freight stations, which handled up to 95 percent of the cargo offloaded at Mombasa, were left to manage less than 10 percent of Mombasa-destined cargo.

Job losses

According to the Container Freight Stations Association (CFSA), more than 4,000 workers lost their jobs since the launch of the SGR and introduction of the mandatory haulage of cargo by train to Nairobi and Naivasha ICDs.

“We had to let go more than half our workers as businesses struggle. All these job losses have happened at the Mombasa port as a result of the reduction in trucked cargo volumes,” said CFSA chief executive Daniel Nzeki.

Kenya Transporters Association condemned the government’s move to force importers to use the SGR saying it does not want to tell the public the hidden costs of using the cargo train to ferry containers.

“It costs $860 including value added tax to transport a 20-foot container to and from Nairobi using a truck but the SGR costs more than $920,” said KTA chairman Newton Wang’oo.

Kenya International Forwarding and Warehousing Association chairman Roy Mwanthi echoed Mr Wang’oo’s sentiments, saying they now expect business to return to normal.

“The move by President Ruto is commended and now we want the executive order to be implemented immediately,” said Mr Mwanthi.

He added that the Naivasha Inland Container depot will remain a futuristic spot, and that “the government facilities should be left open to those willing to use them, and the government should make them efficient”.

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President Ruto off the blocks with drastic economic policy decisions, orders

Kenya President William Ruto faces a Catch-22 situation in his quest to overturn some of his predecessor Uhuru Kenyatta’s policies so as to deliver on his campaign promises on the economy to bring down the cost of living.

On his first full day in office last Wednesday, President Ruto withdrew the state subsidy on petrol, cut relief on diesel and kerosene, pointing to a pending end also to the subsidy on the staple maize flour.

The fuel subsidy introduced by Kenyatta’s administration in April last year to defuse public apprehension over the rising cost of living was due to end this September 30 under conditions agreed between the Treasury and the International Monetary Fund (IMF) for a loan.

Dr Ruto, keen on stamping his authority in early days of his presidency, was quick to cut the programme, saying it had not achieved its purpose and was not sustainable.

Read: Kenya’s Ruto pledges to bring down cost of living ‘in 100 days’

He has indicated preference for productive subsidies and could use part of the Ksh9.4 billion savings expected from the fuel subsidy squeeze to fund a plan to distribute 1.4 million bags of fertilizer at discounted prices to maize farmers for planting in the current short rain season.

While the government looks to the fertiliser programme to improve maize production in at least the next three months, it also has immediate concerns over the high transportation and production costs arising from the fuel subsidy cuts to deal with.

Bus operators were on Friday expected to raise fares by between 20 percent and 30 percent due to the higher cost of diesel announced late Thursday — a decision that will put more pressure on household budgets, and especially affecting urban workers most of whom will be forced to walk to work.

Transport accounts for the third highest expenditure by Kenyan households after food and housing.

A 2018 study by Deloitte found that a majority of commuters use matatu (mini bus public service transport) and boda-boda (motorbike taxis). In the capital Nairobi, 47 percent of residents prefer to walk, according to the study.

“Bottom-up” pledge

The findings of another study released early this year by the Nairobi Securities Exchange-listed company Car & General, which sells motorcyles and motorcyle spare parts, put the number of boda-boda riders at 1.2 million and the number of people whose livelihoods are supported by the business at six million.

With Dr Ruto’s subsidy squeeze setting off a significant rise in fuel prices, the boda-boda is likely to see the daily rides go down drastically, potentially causing unease in a sector that the president aggressively courted through his “bottom-up” campaign slogan.

The public disgruntlement could be even more widespread if the president’s scrapping of fuel subsidies ends up sparking drastic increases in the cost of food and other household goods.

Diesel is widely used in Kenya for transport, to power farm and manufacturing machinery, thereby determining production costs.

Read: Consumers in Kenya hit by fuel and electricity cost shocks

Kenyans have since the beginning of the year expressed frustrations over unprecedented increases in the prices of key food items such as maize and wheat flour and cooking oil, mainly attributed to global supply chain disruptions caused by the Russia war in Ukraine.

Global risk assessment firm Verisk Maplecroft early this month said that Kenya is one of the countries alongside Peru, Iran and Sri Lanka facing the threat of civil unrest over the high cost of living.

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Uganda to introduce fines for internet misuse

Misuse of internet in Uganda will now attract hefty fines and longer jail terms, following amendments on the Computer Misuse Act 2011 that were passed last week.

The amendments, now awaiting the president’s signature to become law, seek to enhance the provisions on unauthorised access to information or data, prohibit the sharing of any information relating to a child without authorisation from a parent or guardian, and to prohibit the sending or sharing of information that promotes hate speech.

According to the new law, one will face a fine of Ush16 million ($4,200) or face 10 years in jail, or both, for unauthorised sharing of people’s data.

Equally offensive will be information shared to ridicule others. Any misleading or malicious information about or relating to any person through a computer and offenders could face up to seven years in jail.

The provisions have caused an uproar, with opponents claiming that it they would take away their right to access information.

Mathias Mpuuga, the leader of the opposition in parliament, said that the new law would be challenged in the Constitutional Court on the grounds that it is inconsistent with some provisions of the law on the rights of the citizens.

During the debate on the Bill, MPs only rejected the clause that sought to bar convicts from holding public office or running for elections in 10 years.

Gorreth Namugga, the Mawogola South representative who read the minority report on the Bill, had earlier urged the House not to pass the proposed law since many of the clauses are already catered for in existing legislations and in some instances, go against the country’s Constitution.

The current act has been used by police to arrest critics and online trolls who post about the first family and other government officials.

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Consumers in Kenya hit by fuel and electricity cost shocks

Kenya’s economic situation deteriorated further as consumers woke up to a record increase in fuel and electricity prices in the same week that the nation’s new leader, President William Ruto, was sworn in.

The record-high fuel surcharge comes at a time when the government and the International Monetary Fund have agreed to end the fuel subsidies that have been cushioning consumers.

The abolishment of the fuel subsidy has seen prices surge by about 15 percent, inflicting more pain to households and businesses that are grappling with the skyrocketing cost of living.

In addition to the removal of the subsidy, the situation has been compounded by the weakening shilling against the dollar, and the annual inflation adjustment levy of 6.3 percent.

The levy will be imposed on imports, including fuel (petrol, diesel and kerosene), by the Kenya Revenue Authority (KRA) from October 1.

The levy will result in an increase of excise duty on products such as fruit juices, bottled water, beer, and motorcycles, according to KRA’s Legal Notice on Draft Rates of Excise Duty for Inflation Adjustment 2022.

The shilling fell to a low of Ksh120.41 against the dollar on September 14 from Ksh120.33 against the greenback on September 9, increasing the debt repayment obligations of an economy grappling with over Ksh8.6 trillion ($71.66 billion) debt.

President Ruto, under the Kenya Kwanza coalition, were elected on a platform of economic transformation, administration of justice to all, and the financial empowerment of the masses, popularly known as “hustlers”, through his bottom-up economic model.

Rising retail prices

The regulator, Energy and Petroleum Regulatory Authority (Epra), said the new retail prices of fuel are in line with the cost of imported refined petroleum products and the government’s policy to progressively remove the subsidy.

Following the changes that took effect on Thursday, the retail price of a litre of petrol, diesel and kerosene in Nairobi has increased by Ksh20.18 ($0.16), Ksh25 ($0.2) and Ksh20 ($0.16) to Ksh179.13 ($1.49), Ksh165 ($1.37) and Ksh147.94 ($1.23), respectively.

Epra had retained the retail prices of fuel for July and August, with the pump price for super petrol, diesel and kerosene in Nairobi trading at Ksh159.12 ($1.32), Ksh140 ($1.16) and Ksh127.94 ($1.06), respectively. Earlier, Epra said in a statement that the average landed cost of imported super petrol, diesel, and kerosene for the month of August declined by 24.31 percent, 13.9 percent and 19.07 percent, respectively.

The regulator also noted that although the subsidy on super petrol has been removed, a subsidy of Ksh20.82 ($0.17) per litre of diesel and Ksh26.25 ($0.21) per litre of kerosene had been retained to cushion consumers.

Without the subsidy, the retail prices of diesel and kerosene would have been Ksh185.82 ($1.54) per lire and Ksh174.19 ($1.45) per litre, respectively.

Also read: Kenya’s oil dealers warn of looming fuel crisis

Inflation

The country’s overall inflation rose for the sixth consecutive month to 8.5 percent in August, from 8.3 percent in July, largely driven by high fuel and food prices.

This is against the government monetary goal of five percent, with a flexible margin of 2.5 percent on either side in the event of adverse shocks.

During the week, Epra also raised electricity prices by 15.7 percent, reversing the reduction by 15 percent in January this year.

The regulator also increased the pass-through cost including fuel, forex and inflation adjustments, pushing the price of a kilowatt hour unit to Ksh25.3 ($0.21) for domestic consumers who use more than a 100 units in a month.

KRA’s move to implement the annual inflation adjustment levy will make life even harder for the struggling taxpayers.

The indexation of specific rates of excise duty to adjust for the inflationary erosion of collected taxes was introduced through the Excise Act 2015.

However, the manner in which the new rates were to be adjusted has been reviewed and revised since the Act took effect in December 2015.

In 2017, the adjustment of the specific rates of Excise duty was initially proposed to be made once every two years.

But the proposal was reversed in 2018 to every year, according to consultancy firm Ernst &Young through its Tax Alert (2020).

The Finance Act (2020) amended the provision in the Excise Duty Act relating to annual inflation adjustment by requiring KRA’s Commissioner General to seek an approval from the Cabinet Secretary for Treasury and Planning to adjust the specific rates of duty.

Thereafter, the adjustment notice is expected to be set before the National Assembly within seven days of publication and approved by the Assembly within 28 days.

High taxation

The government has come under heavy criticism for the increase in fuel prices in the country through over taxation, with the cost per litre of fuel consisting close to 50 percent taxes.

Barely two weeks ago, Kenya Pipeline Corporation (KPC) warned of an imminent fuel shortage in Nairobi and the western parts of the country due to the delayed compensation to oil marketing companies.

KPC, which is mandated to transport, store and deliver petroleum products to consumers, said the risk of fuel stock-out has increased owing to low uplifts of AGO (diesel).

In a letter to the Principal Secretary in the state department of Petroleum and Mining, Andrew Kamau, dated September 7, KPC managing director Macharia Irungu said the timely delivery and replenishment of petrol and kerosene has been adversely affected owing to the low uplift of diesel.

“Our mandate to transport petroleum through the multiproduct pipelines to the KPC storage locations has been greatly affected by the low uplifts witnessed since beginning of July 2022,” said Mr Irungu.

“As you are aware AGO (diesel) being the carrier product of all other grades in the pipelines is the most affected with the daily average uplift volume dropping from 11,500 cubic metres to 9,000 cubic metres, marking a 30 percent drop. This has directly affected timely delivery and replenishment of MSP (petrol) and DPK (kerosene).”

According to KPC the low uplifts has led to stock-outs and delays in the replenishment of petrol, illuminating kerosene and jet fuel in the KPC locations.

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Cybercriminals on the continent target East African firms most

Businesses in East Africa have reported the highest number of cyber-attacks in Africa, implying the rising threats that come with massive digital transformation.

A survey by audit firm KPMG focusing on 300 companies, both large corporations and small and medium-sized enterprises (SMEs), reveals that about three in 10 businesses in the region have fallen victim to cyber-attacks.

The survey blames this on “rapid development and adoption of digital technology across business sectors with limited expertise and awareness around technology and digital infrastructure.”

About nine in ten firms in the region are currently undertaking a digital transformation or have already finished transitioning, compared to 82 percent in West Africa.

John Anyanwu, Africa cyber lead at KPMG, said many economies in the continent have managed to shake off pandemic woes and the effects of other shocks to increase “consumption and adoption of digital technologies at grassroot level.”

The threats

But cybercriminals have revamped their tactics to prey on unsuspecting organisations, primarily posting ransomware, business email compromise and data leakage threats to firms across the continent.

“Today, there is a much larger focus needed on not only mitigating threats, but in the way organisations are set up to deal with them,” said Anthony Muiyuro, cyber lead at KPMG East Africa.

Even so, a quarter of firms across the continent are yet to develop any form of strategy to prevent or deal with cyber-attacks, with only 34 percent of those with a strategy having independent cyber and information security functions.

“This function should be a strategic focus, cut across all business functions. Therefore, establishing an independent information security function is touted as a critical success factor for mature information risk management,” Mr Muiyuro said.

In East Africa, where there is the most threat, 77 percent of businesses have well-defined and regularly reviewed cyber strategies, even though all countries in the region except the Democratic Republic of Congo have established cyber security legislation that requires some form of information protection.

Budget constraints and shortage of skills still hinder African companies’ efforts at building strategies and security operation centres.

While 55 percent of African firms said they are planning on recruiting cybersecurity professionals in the next 12 months, more than two-thirds of the companies find it hard to recruit and retain qualified personnel.

A 2022 report by the International Systems Audit and Control Association estimates that there are currently three million cyber security job vacancies globally that remain unfilled, and this is projected to rise to 10 million in the next few years.

Other challenges that impair organizations’ ability to establish cybersecurity strategies include an influx in the number of security alerts reported, difficulty managing and analyzing related data, and lack of documented processes.

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IMF roots for cross-border Africa trade to stem rising food insecurity

The International Monetary Fund is appealing to African countries to open up their local markets to commodities from their regional peers as a long-term solution to persistent food shortages.

Last week, the fund released a policy paper urging countries to expand cross-border trade to better deal with the rising food crisis on the continent.

According to the paper How Africa can Escape Chronic Food Insecurity amid Climate Change”, only 15 percent of food imports into the continent are from neighbouring countries.

“African countries have not lifted most of the restrictions even though it could benefit both net food importers and exporters from trading with one another,” states the document authored by a team of African economists.

The report underscores the implementation of the African Continental Free Trade Area (AfCFTA) as a step in the right direction, noting that opening up of markets would further reduce trade costs by 16 to 17 percent.

“In the context of climate change, greater regional trade integration can enhance food availability and affordability,” the paper says. “Combined with resilient storage and transport infrastructure, it can facilitate sales of one country’s bumper harvests — that may have gone to waste — to a neighbouring country facing shortfalls.”

Also read: Africa losing 15pc of GDP growth to climate change

The economists called for robust fiscal, monetary, and financial policies to improve the affordability and accessibility of food products. They are also recommending targeted interventions such as social cash transfers to allow families and small businesses to invest in resilience-building equipment and technology.

According to the paper, the targeted interventions are “more effective at containing inequality than agricultural subsidies”.

Digitalisation has also been encouraged, to improve farmers’ access to early warning systems, mobile banking and other platforms to buy farm inputs and sell output, enabling small-scale farmers to a wider market in the continent.

Financing

Access to credit and financing from private markets for small-scale farmers and traders also needs to be improved to better position Africa as a food-secure continent.

“In the interim, micro-finance or public-private partnerships can help provide credit to people who currently don’t have access through banks,” the authors state, adding that developing the required financial markets to improve access could take time even as the risk is urgent.

The IMF paper follows an earlier report by the United Nations Economic Commission for Africa (ECA), which stated that the war in Ukraine and other economic shocks on the continent have pushed nearly half of its population to the brink of starvation.

The July 2022 report showed that 124 million people in Africa are already starving, 300 million more are at risk of food insecurity and several others spend majority of their household budget on food.

The food crisis on the continent, according to ECA, results from a mix of economic shocks instigated by the conflict in Eastern Europe, the Covid-19 pandemic, and natural calamities like droughts and floods occasioned by climate change.

ECA recommends the utilisation of the African Trade Exchange (Atex) platform, which was created in May this year in collaboration with the African Development Bank, African Export-Import Bank and the AfCFTA secretariat.

The Atex platform aims to ensure Africa’s supply chain resilience by enabling trade of major agricultural commodities and inputs imported from Russia and Ukraine, consequently improving their price stability.

According to the IMF, climate change is intensifying food insecurity, and Russia’s war in Ukraine and the Covid-19 pandemic are also adding to food shortages and high prices.

The fund notes that climate events, which destroy crops and disrupt food transport, are disproportionately common in the region.

According to the fund one-third of the world’s droughts occur in sub-Saharan Africa, and Ethiopia and Kenya are enduring one of the worst in at least four decades.

Countries such as Chad are being severely impacted by torrential rains and floods.

The resulting rise in poverty and other human costs are compounded by cascading macroeconomic effects, including slower economic growth. Supplies and prices are especially vulnerable to climate change in sub-Saharan Africa because of a lack of resilience to climatic events, food import dependence, and excessive government intervention.

Most people live in rural agricultural and fishing communities that can’t afford infrastructure to protect them from adverse weather. For instance, they depend on rain to water their crops, as less than one percent of arable land is irrigated.

Weather-sensitive domestic food production results in heavy reliance on imports, with some 85 percent coming from outside the region.

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South Sudan offers 14 oil blocks to increase output

South Sudan is putting up 14 oil blocks for sale in a bid to increase production to pre-war levels of 350,000 barrels a day.

Chol Deng Thon Abel, the Managing Director of state-owned oil consortium, the Nile Petroleum Corporation Limited (Nilepet), told journalists in the capital Juba on Wednesday that interest in its nascent petroleum industry has been growing.

Much of South Sudan’s oil and gas blocks are yet to be fully explored and resources assessed, stalled by conflict.

“We have 14 oil blocks that have not been taken, and we invite international companies that are here to seize the opportunity to apply for these blocks. South Sudan is actually very busy nowadays attracting international companies to come and invest in the oil industry, and this conference is a very good platform to exchange ideas with international companies,” Mr Abel said at the end of the 5th annual oil and power forum.

Read: South Africa signs oil search deal with South Sudan

South Sudan has the third-largest oil reserves in sub-Saharan Africa, estimated at 3.5 billion barrels, with only about 30 percent of the country explored.

The country currently produces 175,000 barrels a day, about a third of the potential 500,000 bpd, in blocks 1, 2 and 4 and blocks 3 and 7, and block 5A in Unity state.

Read: South Sudan’s oil production plummets

“We have a lot of countries now saying that we need to increase production because there is a huge need for crude because you have the sanctions on Iran, Venezuela and recent Russia and this is where South Sudan is positioning itself to increase production,” Mr Abel said.

Nilepet plans to take over blocks 3 and 7 by 2027, he disclosed, when the exploration production sharing agreement expires.

Blocks 3 and 7 are operated by Dar Petroleum Operating Company, a consortium owned by Malaysian Petroliam Nasional, China National Petroleum Corporation, China Petrochemical, Nile Petroleum and MOG Energy.

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Kenya rattled as Britain rejects new EAC tariffs

The UK has demanded that its exports to Kenya be exempted from the newly raised East African Community (EAC) tax charges that took effect on July 1, posing a big dilemma for Nairobi, which is bound by the regional bloc’s decisions.

Trade Principal Secretary Johnson Weru said the UK demands that Kenya abide by the provisions of an Economic Partnership Agreement (EPA) signed between the two nations—a request that, if granted could trigger similar demands from other nations.

In a deal struck on May 5, 2022, by the Partner States of the EAC, the Common External Tariff (CET) for imports entering the bloc has been raised by up to 35 per cent from July 1.

The levy is imposed on imported finished products from non-member States in a strategy to stimulate local industry and production.

Mr Weru said the UK had sought assurance “that the EAC-CET 2022 will not apply to them on the basis of the standstill provisions of the Kenya-UK EPA, which entered into force prior to the amendment. This presents a challenge to the implementation of the new CET to ongoing trade agreements.”

Fresh cut flowers

The new levy affects a tax band of products that also includes iron and steel, edible oils, furniture, leather products, and fresh-cut flowers.

Other products on the raised CET tax band include fruits, nuts, sugar and confectionery, coffee, tea, spices, head gears, ceramic products and paints.

This means that from July 1, imports of commodities entering Burundi, Kenya, Rwanda, South Sudan, Uganda, and Tanzania now cost more.

Based on its EPA with Kenya, the UK wants Kenya not to apply the CET levies on its products.

Kenya signed the EPA with the UK on December 8, 2020, before it was ratified by the UK Parliament on March 5, 2021, and by the Kenya National Assembly on March 9, 2021.

Kenya is pursuing a new bilateral trade deal with the UK post-Brexit, hoping to cushion its economy after partner states of the EAC failed to conclude an EPA with the EU. Only Kenya signed and ratified the deal.

Until the end of the Brexit transition period, Kenya enjoyed duty-free, quota-free access to the UK’s markets through the EU’s Market Access Regulation (MAR).

As the UK did not replicate the MAR at the end of the transition period, Kenya would have faced an increase in tariffs without a trade agreement or other measures in place.

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The UK has demanded that its exports to Kenya be exempted from the newly raised East African Community (EAC) tax charges that took effect on July 1, posing a big […]

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French firms wait on Kenya’s call over Mau Summit highway

French firms are waiting for Kenya’s decision on whether they should go ahead and expand the Mau Summit highways, a key road for cargo movement between Kenya and neighbouring countries.

Visiting French Minister of State for Development, Francophonie and International Partnerships, Ms Chrysoula Zacharopoulou, said it is up to the new President William Ruto when works on the Northern Corridor road starts.

Ms Zacharopoulou spoke to the media on Wednesday, a day after attending Dr Ruto’s inauguration and later met with him at State House to discuss priorities in their bilateral relationships.

But the pending issue from his predecessor Uhuru Kenyatta’s days is the incomplete deal that would have seen French firms finance and build the 233km highways that start on the edge of Nairobi in Rironi to Mau Summit through Nakuru.

“We have to resume talks, obviously, but it would be something important and would be nicer for the new administration to speak with the companies,” she said in Nairobi.

“It [discussion] has been slowed by the electoral period, but now we are ready, and all the companies and financiers are waiting to put money into it, but they are waiting for Kenya to resume its part,” she added, referring to the general elections in the two countries.

Talks

French President Emmanuel Macron won back his seat in early May, while Kenya’s electioneering period to replace retiring Uhuru Kenyatta ended on Tuesday.

President Kenyatta had begun discussing the construction of the Ksh160 billion ($1.3 billion) toll highway from Nairobi to Mau Summit, slated to start in September last year.

A French consortium made up of Vinci Highways SAS, Meridian Infrastructure Africa Fund, and Vinci Concessions SAS was tasked to expand the main artery from Nairobi to western Kenya into a four-lane dual carriageway through a public-private partnership model.

The consortium was to design, finance, construct, operate and maintain the highway. The companies would then recoup their finances using the revenues and income generated from tolls charged on motorists at a given tariff. 

Read: Kenya’s plan to toll new Nairobi-Mau Summit highway faces opposition

More players

In July, the African Development Bank (AfDB) approved financing of $150 million to support the project, which involves widening the existing Rironi- Mai Mahiu–Naivasha road to a seven-metre carriageway with two-metre shoulders on both sides. It also includes the construction of a four-kilometre elevated highway through Nakuru town and the building and improvement of interchanges along the highway.

The loan is to be disbursed to Rift Valley Highways Limited – a Kenyan registered special purpose vehicle owned by the consortium.

The Rironi–Nakuru–Mai Mahiu road is part of the Northern Corridor network linking the port of Mombasa through the Malaba border to Uganda, South Sudan, Rwanda and the Democratic Republic of Congo.

“The companies and financiers are waiting for the letter of support, which is the way Kenya commits to this project,” the French minister said.

“For us, there is a very strong political support even though it is a private project. It all depends on the priorities of the new president.”

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French firms are waiting for Kenya’s decision on whether they should go ahead and expand the Mau Summit highways, a key road for cargo movement between Kenya and neighbouring countries. […]

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Hard times for Kenya SGR as port operations return to Mombasa

Kenya’sPresident William Ruto has returned all port operations transferred to Nairobi and Naivasha Inland Container Depots (ICDs) to Mombasa, reversing one of the most controversial policies of the Jubilee administration.

To ensure that the standard gauge railway (SGR) has minimum guaranteed business to repay the Ksh450 billion ($3.7 billion) debt taken to build it, the Uhuru Kenyatta administration forced traders to use the modern railway line, a policy that saw the government transfer clearance to enforce compliance.

Read: Mandatory SGR use causes unease among importers

Speaking on Tuesday during his inauguration, Dr Ruto said the move is aimed at restoring thousands of jobs that had been lost in Mombasa.

“This afternoon, I will be issuing instructions for clearance of all goods and other attendant operational issues to revert to the port of Mombasa. This restores thousands of jobs in the city of Mombasa,” said Dr Ruto.

Former President Uhuru Kenyatta in 2019 launched the extended SGR freight services from Mombasa to the Naivasha ICD, promising faster transportation of cargo to western Kenya and on to neighbouring countries.

Read: SGR moves regional cargo to Naivasha

He also put in place various policies to protect the SGR but ended up hurting transporters who lost thousands of jobs at the Kenyan coast.

The directive is also likely to hurt the businesses that had set up in Naivasha after the directive. The Naivasha ICD was at the heart of Kenya’s ambition to become the transport corridor of choice for neighbouring countries like Tanzania and Uganda.

The State also launched in the same year the upgraded ICD in Nairobi to promote efficient transportation of bulk cargo from the port of Mombasa to the hinterland. The Nairobi ICD which was built by the China Roads and Bridge Corporation (CRBC) was expected to decongest the port of Mombasa while lowering the cost of transporting goods.

But both moves did not go down well with cargo owners who are being forced to ferry their goods to Nairobi or Naivasha via the SGR for onward clearance. Cargo transporters protested the directive, saying the government’s move would raise the cost of doing business, with the costs passed on to consumers.

The government was also accused of issuing the directive without engaging stakeholders and addressing the inefficiencies associated with the port and the Inland Container Depot (ICD) in Nairobi.

To date, an appeal challenging orders quashing the directives requiring all cargo be transported to Nairobi and the hinterland exclusively through the SGR is yet to be determined by the Court of Appeal.

The appellate court last November suspended the execution of orders quashing the directive issued by a five-judge bench of the High Court, pending hearing and determination of the appeal filed by the Kenya Ports Authority (KPA).

The KPA argued that the directives were meant to operationalise the take-and-pay agreement, which is key to ensuring the loan for the construction of the modern railway line is repaid without many hitches.

According to the take-and-pay agreement, KPA undertook to consign to Kenya Railways a set volume of freight and cargo.

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Kenya’sPresident William Ruto has returned all port operations transferred to Nairobi and Naivasha Inland Container Depots (ICDs) to Mombasa, reversing one of the most controversial policies of the Jubilee administration. […]

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DR Congo pledges to pay EAC dues and cement role in bloc

The Democratic Republic of Congo says it will settle dues to the East African Community on time, reflecting the country’s commitment to its new membership in the bloc.

On Thursday, DRC Deputy Prime Minister Christophe Lutundula said Kinshasa is ready to send representatives to EAC organs to cement role in the bloc it formally joined in May. The country, like other member states, is required to pay at least $8 million a year.

Most countries owe the bloc membership fees, however, with South Sudan leading with more than $20 million due.

DR Congo needs to pass amendments to its laws to allow free movement of people, localise trade protocols of the EAC and send members to the East African Legislative Assembly, East African Court of Justice and the Secretariat.

He spoke as the EAC kicked off its first mission to the country led by Secretary General of the EAC Peter Mathuki.

Read: EAC team on orientation tour in DR Congo

Governance instruments

The mission aims to reflect on the key priorities for deepening integration and exploiting investment opportunities, a dispatch said.

It is also meant to help the DRC to improve the understanding of the integration pillars; Common Market, Customs Union, Monetary Union and Political Federation protocols; and the various governance instruments of the EAC to help it easily join the community.

Mr Lutundula said the DRC is preparing to “reorient its policies and resources to create favourable conditions for the development of international trade, to create favourable conditions for the development and achievement of the objectives of the Community.”

“As a member, the DRC will adopt legislation to ensure the effective implementation of the provisions of the Treaty establishing the East African Community.”

Kinshasa says it is already working on a policy for free movement of people, workers, labour, goods and services in the region.

Dr Mathuki said the DRC’s membership will expand the Community’s consumer market from 177 million to 260 million people, raising the GDP from $193 billion to $240 billion.

Although lacking in infrastructure such as roads linking the provinces, the DR Congo has 80 million hectares of arable land, over 1,100 different viable minerals and a market of 90 million people.

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Tanzania slaps new rules on foreign grain traders

Kenyan grain traders seeking to import maize from Tanzania will now be required to register their companies in Dar es Salaam as the country imposes stricter rules to protect its commodities and jobs from shifting abroad.

The new measure by Tanzania will have an impact on Kenya’s food security as the country relies heavily on cross-border stocks from this East African nation to bridge the annual deficit.

A notice issued by Tanzania’s Ministry of Agriculture wants foreign traders to register their companies in Tanzania to enjoy better terms and ensure a smoother flow of their commodities across the border.

Tanzania’s Agriculture minister Hussein Bashe said in an interview with The Citizen that the country has not stopped the issuance of permits but has put in place processes to control the arbitrary export of grains.

Read: Tanzania dismisses claims of freezing maize export permits

The measures include the mandatory requirement to secure export permits and the need for foreign exporters to register their entities domestically.

“The ministry urges those who are not Tanzanians to register their companies and to follow the law of the land, so that they can benefit from doing grain business in the country,” said the Tanzanian Ministry of Agriculture in a notice.

Measures

Data from the Eastern Africa Grain Council shows imports from Tanzania nearly grew five-fold last year to 469,474 tonnes from 98,000 tonnes in 2020, making it the largest exporter of grain to the country.

The raft of measures issued by Tanzania a fortnight ago also makes it mandatory for importers and exporters of grain to register with the Business Registrations and Licensing Agency (BRELA) and obtain a trading permit.

Traders will also be required to present tax clearance certificate and show business permit issued by BRELA, allowing them to trade on grain before they are allowed to export the commodities.

Before this, Kenyan traders bringing in maize from Tanzania were only required to have export permits, according to United Grain Millers Association chairperson Ken Nyaga.

These strict conditions have seen traders cut on imports from Tanzania, worsening the situation locally, given limited supply of maize locally.

Some millers and animal feed manufacturers raised concerns early in the week that Tanzania had stopped issuing permits last week, cutting the supply of the grain locally.

However, Dar es Salaam has dismissed the claims surrounding the export permits, urging traders from Kenya to follow the right procedures.

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How Kenya’s unemployment rate rose highest in East Africa

The number of Kenyans out of work has doubled over a decade of infrastructure-fuelled economic growth and faster adoption of technology that has left East Africa’s largest economy with the highest unemployment rate in the region.

World Bank data shows 5.7 percent of Kenya’s labour force was out of work in 2021, up from 2.8 percent when the Jubilee administration took over in 2013.

In the same period, unemployment as a portion of the labour force fell from 2.9 percent in 2013 to 2.6 percent in Tanzania while the rate went up in Ethiopia from 2.3 percent to 3.7 percent.

In Uganda unemployment rose from 1.9 percent to 2.9 percent while in Rwanda the rate rose from 1.2 percent to 1.6 percent.

The Kenyan economy has grown by an average of 5.0 percent but this growth has come from capital-intensive infrastructure projects which have not trickled down to the average citizen.

Analysts say the country’s private sector has also rapidly taken up technology that saw massive job cuts, especially in the services like insurance and banking.

Kenya’s unemployed is almost twice the 2.7 percent East African average, with Rwanda having the lowest rate of unemployment at 1.6 percent.

Tanzania, which had a higher rate of unemployment than Kenya in 2013, has lowered its rate below second-placed Ethiopia and third-placed Uganda in the region.

“One of the reasons is the greater adoption of technology which led to a rise in unemployment. Remember banks and fintech shedding jobs?” Prof XN Iraki, an economist at the University of Nairobi, said.

“Secondly, there has been less than expected economic growth, we never reached the magical 10 percent envisaged in Vision 2030. The growth has also been driven by large capital projects which are not labour-intensive.”

The incoming government has the difficult task of kick-starting an economy deeply troubled by high inflation and a lack of jobs.

The Kenya Kwanza administration faces the uphill task of delivering poll promises on jobs, cost of living, economic reforms, infrastructure and housing amid a public sector job freeze and a slump in the private sector due to the Covid-19 pandemic.

The situation is worsened by the more than one million young people who graduate from colleges and universities annually in an economic setting that is plagued by reduced hiring on the back of sluggish corporate earnings.

Companies have also been shedding jobs due to technology. For instance, the rise of mobile banking has allowed lenders to reach customers directly, reducing the need for physical locations in a move that has also led to massive job losses among clerical staff.

Banks shed 6,574 clerical jobs between 2014 and 2019 as they move towards digital banking over mobile phones, allowing lenders to employ technology to eliminate mundane tasks, manage costs and increase efficiency.

Prof Iraki says that over the last decade most of the country’s resources have also been spent unwisely, especially by county governments, which devolved corruption and failed to stimulate the economy by consuming Exchequer issues instead of funding development.

The Jubilee administration also failed to deliver job growth due to unfriendly practices like the failure to settle half-a-trillion shilling pending bills that killed many small businesses due to cash flow constraints.

Latest Treasury statistics show pending bills climbed to Sh504.7 billion at the end of the last financial year in June, a 40.39 percent jump over Sh359.5 billion the previous year, making it the biggest annual jump on record.

“Resources sucked into the public sector after devolution were not as efficiently used as expected. They would have created more jobs if they were in the private sector,” Prof Iraki said.

“The regulatory environment has also not been friendly to job creators. Beyond covid-19 stimulus, we have rarely stimulated our economy.”

Kenya has a youth bulge, with 18-34-year-olds making up 25 percent of the population, and those below 15 making up 43 percent.

This part of the population can be a blessing or a curse, for instance fuelling crime and social unrest. Without jobs, insurance or pension when they advance in age, they will weigh heavily on the state’s health and social spending.

Prof Iraki said for businesses the huge number of unemployed youth could bring labour costs down and would be ideal for companies producing goods for exports.

A large number of jobless youth, however, means companies do not see market potential as they will not be able to afford goods and services, thus making the country unattractive for investments targeting local consumers.

“High unemployment rate could put pressure to reduce wages and salaries and investors should be cheered by such low wages. But the low purchasing power would discourage them too unless they are producing for the export market,” Prof Iraki said.

“This might not have a big effect regionally because labour mobility is not that high in Africa. But we have seen Kenyans seeking jobs abroad.”

Kenyans are indeed going abroad in search of jobs with the Central Bank of Kenya Diaspora Remittance Survey indicating 63.6 percent of Kenyans in East Africa left their motherland in search of jobs.

The exodus has not always meant better fortunes given the Survey indicated that income levels are lowest in Asia and East Africa where the majority of respondents earn less than $2,000 per annum, which is a pointer to the type of jobs held by migrants.

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Uganda to allow investors to stay in wetlands

Uganda has ordered all its citizens to vacate wetlands and forest reserves but will allow investors who had set up factories to operate in the meantime because they were misled.

Finance Minister Matia Kasaija said the government is allowing the investors to occupy the catchment areas because they could have been unaware they are protected areas.

“If those [investors] were misled, they will be tolerated because they were not told from the word go, but those [locals] who went there [wetlands] having been warned are the ones we are targeting,” he said.

He made the remarks while unveiling the International University of East Africa as the venue for the upcoming East African Food security symposium and expo scheduled for October 14 to 16.

The government’s move against wetlands encroachment is due to pollution, which is taking a toll on Lake Victoria and other water bodies, Mr Kasaija said.

In July, the government removed rice on an estimated 30-acre wetland in Otuke District in northern Uganda to dissuade farmers from cultivating in catchment areas.

President Yoweri Museveni had ordered all encroachers out of wetlands in January..

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Uganda has ordered all its citizens to vacate wetlands and forest reserves but will allow investors who had set up factories to operate in the meantime because they were misled. […]

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Tanzania dismisses claims of freezing maize export permits

Tanzania has dismissed claims by Kenyan traders that it has frozen the issuance of new maize export permits, urging them to follow procedures.

“Tanzania hasn’t barred issuance of permits for maize exports and it is not planning to do so. Traders should follow crop export procedures including securing crop export permits that are issued free of charge,” said Agriculture Minister Hussein Bashe told The Citizen on Wednesday.

“Between August 27 and September 7, 2022, Tanzania issued maize export permits for 37,450 tonnes of the product,” added Mr Bashe.

Agricultural produce exporters, he said, a required to secure an export permit and a phytosanitary certificate. Foreign exporters are required to register their companies in Tanzania.

“The challenge is that people don’t want to follow procedures. Foreigners would like to arbitrarily enter the farms in Tanzania and ferry the crop to their respective nations,” he said.

The minister said the procedures are to help control arbitrary crop business.

“These procedures have been put in place to prevent possible burden that could befall the government and the country in case there were challenges facing the produce in the international market,” he said.

The minister’s comments follow claims by Kenyan traders that Tanzania had stopped issuing permits since last week, a move that tightened the supply of the staple in Kenya.

Read: Tanzania freezes exports permits for Kenyan traders

Tanzania has for the last two years become a key source market for maize to bridge deficits especially after the two countries mended their trade ties with the change of regime last year following the death of former President John Magufuli.

Data from the Eastern Africa Grain Council shows Kenya imports from Tanzania nearly grew five-fold last year to 469,474 tonnes from 98,000 tonnes in 2020. The development has left processors jostling for stocks that are available locally and a few imports coming in from Zambia.

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Tanzania has dismissed claims by Kenyan traders that it has frozen the issuance of new maize export permits, urging them to follow procedures. “Tanzania hasn’t barred issuance of permits for […]

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Uganda farmers, millers seek ban on maize exports

Ugandan farmers and millers are seeking a ban on the export of maize so as to retain husks used for the manufacture of animal feeds.

Following the disruption of grain supplies from Ukraine and Russia in the wake of the Moscow invasion, countries in East Africa have been competing for the limited maize stock for consumption and producing animal feeds.

The government estimates the country will produce about 2.5 million tonnes of maize this year, down by half, due to poor rainfall.

Agriculture Minister Frank Tumwebaze said the farmers and processors want the government to only allow the exportation of maize flour. “Their argument is that this would bring in more value and also make animal feeds available and cheaper,” he said.

Mr Tumwebaze said the government would study the impact of such a ban.

Uganda is a major source market for Kenya, South Sudan and the Democratic Republic of Congo.

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New maize shock as Tanzania freezes exports permits for Kenyan traders

Tanzania has frozen the issuance of new maize export permits for Kenyan traders in what could worsen the shortage of the product, which has driven prices of flour to historic highs.

Several millers and animal feed manufacturers in Kenya told Business Daily the neighbouring country stopped issuing permits last week, tightening the supply of the staple locally.

“We have been unable to get maize from Tanzania since last week after the country stopped issuing export permits to traders with the cutting off of stocks from Tanzania expected to push up the cost of flour,” said Ken Nyaga, the chairperson of the United Grain Millers Association.

John Gathogo, publicity secretary of the Association of Kenya Feed Manufacturers, said their members are unable to get stocks from Tanzania as well following the move that has seen processors cut down on production.

Millers are issued with a one-off permit for grain export from Tanzania and they need to apply for a new one every time they intend to ship maize out of that country.

Tanzania has for the last two years become a key source market for maize to bridge deficits especially after the two countries mended their trade ties with the change of regime last year following the death of former President John Magufuli.

Data from the Eastern Africa Grain Council shows imports from Tanzania nearly grew five-fold last year to 469,474 tonnes from 98,000 tonnes in 2020. The development has left processors jostling for stocks that are available locally and a few imports coming in from Zambia. Tanzania restricts exports to protect its local stock following poor harvests.

Read: Kenya wants share of maize imports from Africa raised

The Kenya Bureau of Standards (Kebs) said the maize coming in through the Namanga border has significantly declined, confirming that imports into the country at that point is originating from Zambia.

“We have witnessed a significant decline in maize coming in from Tanzania; on average we are now getting 10 trucks from a high of 80 trucks previously,” a Kebs official at the Namanga border said.

The move leaves Zambia as the only key source market for the produce to bridge the local deficit as most stocks from Uganda— also a key source — is now heading to South Sudan owing to high prices in Juba.

The shortage occasioned by Tanzanian ban will push up the price of maize locally to Ksh5,900 ($49.06) for a 90-kilogramme bag from Ksh5,400 ($44.91), according to millers.

Kenya has been relying on cross-border stocks from Tanzania and Uganda to meet the rising demand of flour after supply in the local market dwindled. The price of flour has jumped to Ksh210 ($1.75) for a two-kilo pack after the subsidy programme that lowered the cost to Ksh100 ($0.83) ended.

Countries in the region are competing for a limited white maize for flour and animal feeds.

$1 = Ksh120.25

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Inflation rises as East Africa battles high food costs and polls anxiety

The East African region is facing a wave of inflation as disruptions in the global supply chain continue and prices of essential commodities rise.

In Kenya, the region’s largest economy, inflation hit 8.5 percent this week — the highest in 62 months —from 8.3 percent in July, on a surge in food and fuel prices.

The Kenya shilling also continued to tumble, partly blamed on jitters around the presidential election results dispute, which has seen former prime minister Raila Odinga challenge the victory of Deputy President William Ruto, who was pronounced president-elect on August 15.

The Azimio la Umoja One Kenya presidential candidate and his running mate Martha Karua filed a petition challenging the outcome of the presidential election on August 22, claiming the election was manipulated to favour Ruto. The Supreme Court is expected to issue a verdict on September 5.

Read: Anxiety in East Africa as Kenya Supreme Court settles election dispute

On August 31, the shilling had fallen 0.03 percent to Ksh120.05 against the US dollar as the apex court began hearing submissions by the petitioners challenging the declaration of Ruto as president-elect.

Foreign reserves had fallen to $7.6 billion— equivalent to 4.39 months of import cover — during the week ending on August 25, from $7.74 billion, equivalent to 4.46 months of import cover, during the week ending July 28.

This breaches the region’s convergence criteria that demands that countries maintain their foreign currency assets above 4.5 months’ worth of imports cover— which is one of the conditions for implementing a single currency regime.

In February, the shilling traded at Ksh113 against the US dollar.

Food, fuel prices

Foreign currency dealers at pan-African foreign exchange firm AZA Finance warned that the political instability in the country would continue to weigh heavily on the local currency in the coming days, possibly surpassing the Ksh120 level against the greenback. Market research report by property consultancy firm Knight Frank predicts that the Kenyan currency will depreciate a little further but stabilise by the fourth quarter (October-December).

Also read: More pain for Tanzanians as fuel prices soar

Besides the uncertainty in Kenya, the war in Ukraine has also triggered a spike in crude oil prices that have fuelled inflation in the region.

According to monthly data from the Kenya National Bureau of Statistics (KNBS), the country’s inflation figures have been on an upward trend from a low of 5.1 percent in February before Russia’s invasion of Ukraine disrupted supply chains, pushing up global energy and food prices.

The situation has been compounded by the removal of a government food subsidy that had seen the price of a two-kilogramme packet of maize flour fall to Ksh100 ($0.83) from Ksh240 ($2). On July 20, outgoing President Kenyatta announced the fifth stimulus package of his regime focusing on food subsidy to cushion households from hunger. The one-month subsidy elapsed after the General Election of August 9.

In August, oil-marketing companies warned of another fuel crisis due to the government’s failure to honour its obligations under the state-funded fuel subsidy programme. The marketers are demanding a huge Ksh65.06 billion ($542.16 million) from the government, an amount which has been in arrears for three consecutive cycles (June, July and August).

In Uganda, the monthly inflation as measured by Consumer Price Index for August increased to nine percent from 7.9 percent registered in July, despite government interventions to lessen the hardship.

The Uganda Bureau of Statistics (UBOS) blames the rise to high prices of foods like plantain (matooke), which has risen from Ush709 ($0.187) per kilograme to Ush802 ($0.212), compared with an average of Ush493 ($0.130) at the same period last year.

Transport costs

Aliziki K. Lubega, the UBOS Director of Economic Statistics, said the cost of transport, a direct result of higher fuel prices, had also increased from 7.3 percent in August 2021 to 8.7 percent in August this year.

“The rise in transport inflation is specifically attributed to long-distance bus fares, which increased to minus 9.5 percent, from minus 27.8 percent,” she said.

She added that monthly petrol inflation increased by 4.5 percent last month from the 7.6 rise registered in July.

Ms Lubega noted that solid fuels inflation increased to 4.7 percent from minus 0.8 percent in July and charcoal, which rose to 4.8 percent in August, from minus 0.7 percent the previous month.

Prices for fresh milk also rose from Ush1,825 (0.482) in July to Ush2,050 (0.542) per litre in August, UBOS report shows.

Other increases in the prices of food were noted in commodities like fish from Ush11,603 ($3.06) to Ush13,339 ($$3.527) per kilogramme; dry beans from Ush3,607 ($0.95) to Ush3,805 ($1.006); maize flour from Ush3,343 ($0.88) to Ush3,421 ($0.904); fresh cassava from Ush827 ($0.218) to Ush914 ($0.24); and green cabbages from Ush810 ($0.214) to Ush1,012 ($0.267).

This rise in inflation comes at a time when government intervention saw an increase in the central bank rate to nine percent in August, from 6.5 in June.

Read: Uganda increases key rate for third time in a row

The central bank also provided exceptional funding to maintain access to money by supervised financial institutions and aided borrowers that were affected by Covid-19 pandemic as they provided credit relief measures that permitted loan rescheduling for a year.

Other inventions are prioritising debt servicing and other statutory obligations and focused expenditure on growth by enhancing sectors with higher multiple effects in economy to support recovery, create jobs and have high impact on poverty reduction, Mr Ggoobi explained.

Globally, inflation in the Eurozone hit a record high of 9.1 percent in August fuelled by soaring energy costs exacerbated by the war in Ukraine.

The United Kingdom currently has the worst inflation of all the G7 countries, hitting 10.1 percent in the 12 months to July.

In the US Federal Reserve chairman Jerome Powell said on August 26 that the monetary policy could be kept tight ‘for some time’ to stem the rising inflation

The US central bank has so far overseen three consecutive rate increases of 75 basis points to deal with high inflation.

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EAC team on orientation tour in DR Congo

The East African Community officials are set to visit the Democratic Republic of Congo to enhance awareness of how the bloc works.

The team led by the EAC Secretary General, Dr Peter Mathuki will comprise heads of EAC organs and institutions and eminent regional business leaders.

The DRC delegation will be led by Vice Prime Minister and Minister for Foreign Affairs Christophe Lutundula Apala Pen’ Apala.

The EAC mission to the DRC will take place in Kinshasa, between September 6 and 9.

The mission will kick off with a two-day forum with DRC government officials and the EAC Secretariat, the East African Legislative Assembly and the East African Court of Justice as well as the eight institutions of the EAC.

“This forum will create a platform to enhance understanding of the DRC government officials on the EAC instruments-protocols, laws, policies and strategies,” Dr Mathuki said.

Dr Mathuki said the forum will provide a platform for heads of EAC Organs and Institutions to enhance awareness and understanding of the various commitments in the integration pillars and the governing instruments that are in place at EAC level to DRC government officials.

The mission aims at enhancing awareness to the DRC government officials on the existing instruments, create trade synergies, explore and build business partnerships and immediate linkages for business associations.

During the forum, the private sector accompanying the Secretary General will hold business-to-business (B2B) meetings aimed at exploring opportunities for building business linkages and partnerships on areas of common interests in aim of developing trade and investment relations.

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Joint Tanzania, Burundi and Rwanda power project nears completion

The Regional Rusumo Falls Hydroelectric Project (RRFHP), a joint venture by Rwanda, Tanzania, and Burundi, is 95 percent done, with completion set for November this year.

The 80MW project was started in February 2012 to supply electricity to the three countries by December 2021 but was extended by two years following procurement flaws that increased its cost by over 20 percent.

Read: Rusumo power project delayed by two years

The three governments received $468 million worth of grants and loans from multiple development partners, including the World Bank and the African Development Bank, for the project.

Taking over the one-year rotational chairmanship at the weekend, Tanzania’s Energy minister January Makamba said the project is expected to catalyse development in the three countries.

Each country is expecting 26MW to be added directly to its national grid.

“This project shows the willingness of these countries to use natural resources to bring about the development of their citizens,” said Mr Makamba.

Respective governments expect the project to help plug power supply deficits. Rwanda specifically banks on the project to help reach its 100 per cent electrification target by 2024.

The project is located at the Tanzania-Rwanda border, Rusumo Falls.

SOURCE

The Regional Rusumo Falls Hydroelectric Project (RRFHP), a joint venture by Rwanda, Tanzania, and Burundi, is 95 percent done, with completion set for November this year. The 80MW project was […]

Continue reading "Joint Tanzania, Burundi and Rwanda power project nears completion"

Uproar over proposal by African leaders to invest in fossil fuels

Climate lobbyists have faulted African leaders over their retrogressive proposal on investment in fossil fuels despite scientists warning that countries should move away from the production and use of the fuels.  Fossil fuels are made from plants and animals that decompose to form natural gas, petroleum and coal.

Scientists have persistently warned that the production of such fuels contributes to greenhouse gas emissions such as carbon dioxide, which are responsible for the changing climate. This call on investments was done during a meeting held in July by Africa’s technical committee on energy in their 41st Ordinary session, which adopted the African Common Position on Energy Access and Just Transition.

Amani Abou-Zeid, the African Union Commissioner for Infrastructure and Energy, said such investments push for favourable outcomes in energy and infrastructure. “This is an important and major step forward in ensuring and confirming Africa’s right for a differentiated path towards the goal of universal access to energy, ensuring energy security for our continent and strengthening its resilience, while at the same time acting responsibly towards our planet by improving the energy mix,” he said.

The leaders suggested that natural gas, green and low carbon hydrogen and nuclear energy will play a crucial role in expanding modern energy access in the short to medium term while enhancing the uptake of renewables in the long term for low carbon and climate-resilient trajectory.

Read: ADOW: Why continent should lead the Green Revolution

The damning proposal comes at the backdrop of the backing of the European Union’s recent vote in favour of a new rule that will consider fossil gas and nuclear projects “green,” making them eligible for lost-cost loans and subsidies.

The climate activists now warn that this plan would distract from the clear need for renewable energy such as the use of solar, and embracing fossil fuels, while also shifting dangerous nuclear technologies shunned by Europeans on African soil.

Mohamed Adow, Director of Power Shift Africa, said in a joint statement from the lobbyists that African leaders should be maximising this potential and harnessing the abundant wind and sun, which will help boost energy access and tackle climate change. “Africa is blessed with an abundance of wind, solar and other clean renewable energies.  What Africa does not need is to be shackled with expensive fossil fuel infrastructure, which will be obsolete in a few years as the climate crisis worsens,” said Mr Adow.

This new call is ahead of the 27th Conference of Parties (COP27), a global climate change meeting that will be held in November in Egypt.

Mr Adow added: “It would be a shameful betrayal of African people, already on the front line of the climate crisis, if African leaders use this November’s COP27 climate summit on African soil to lock Africa into a fossil fuel-based future. Africa does not need the dirty energy of the past, it needs forward-looking leadership that can take advantage of the clean energy of the present and future.”

Dr Sixbert Mwanga, the coordinator of Climate Action Network Africa, urges leaders to transfer those resources to renewable energy such as solar, wind, and geothermal, which are safer for the planet. “At COP27, we call for the African Union and African leaders to announce the utilisation of these sources for the benefit of our people and leave aside fossil fuel development for export.”

Read: ATELA: What agenda will an African champion bring to COP27?

The Intergovernmental Panel on Climate Change (IPCC), which brings together science experts on climate change, warned in its latest report that human activities such as fossil fuel production and use adversely affect our climate. Lorraine Chiponda, Africa Coal Network Coordinator, reiterated this, saying the world needs to cut carbon emissions to prevent catastrophic climate impacts.

“The globe already has seen the temperature rise and we will exceed 1.5ºC by 2030 and suffer an increase in intensity and frequency of climate disasters. The prospect that African leaders are presenting and pushing for gas developments and investment is overwhelming and reckless given the climate impacts that threaten the lives of millions of people in Africa having seen worsening droughts and hunger, recurring floods and cyclones,” she said.

“We have seen in the past the acceleration of gas projects in Africa is another colonial and modern Scramble and Partition of Africa amongst energy corporations and rich countries. Fossil fuel projects have neither solved energy poverty in Africa where 600 million still live in energy poverty nor brought any socio-economic justice to Africans. We shall continue to strengthen calls for a people’s just transition away from fossil fuels,” she added.

One of the contested fossil fuel projects in Africa is the East African Crude Oil Pipeline Project (EACOP), which will be in Uganda and Tanzania. Coordinator #StopEACOP Omar Elmawi said it is time for Africa to invest in green energy that supports and meets African needs and not extract oil and gas for Europe’s needs as we leave all the impacts and destruction to be faced by the African people.

Joab Okanda of the Pan Africa Senior Advocacy Advisor, Christian Aid feels that Africa is being shortchanged by its own leaders. “The African Union is in danger of falling for the con of African gas at a time when other countries are investing in renewables, which will be what powers development and progress in coming decades. It would be the ultimate betrayal of African people if their leaders missed the opportunity to become a renewable energy superpower by locking us into a doomed experiment with fossil fuels that is hurting Africa through climate breakdown.”

SOURCE

Climate lobbyists have faulted African leaders over their retrogressive proposal on investment in fossil fuels despite scientists warning that countries should move away from the production and use of the […]

Continue reading "Uproar over proposal by African leaders to invest in fossil fuels"

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