Let's not waste chance on smart partnership

 

In Summary

• This implies that the government has not managed yet to translate the growing economy into better standards of living for ordinary Tanzanians. Even when people are employed, the majority fall in the category of the so-called working poor.

Since Friday, Tanzania has been hosting the 2013 Global Smart Partnership Dialogue, a national and international consultative forum in which governments engage all sectors of the economy to find solutions to perennial development problems.

The idea is to share information, knowledge and expertise. We hope the government and local participants will take this opportunity to learn from expert contributions and bring about desired changes to our fledgling economy as we envisage making our country a middle class economy by 2025.

But two questions arise: How serious are we, as a nation, about such national and international events? What have we ever tried to implement? This is not to suggest that we are sceptical about the outcome. We are just concerned that there will be little or no follow-up after the big event.

We have in mind the problem of poverty, which remains a major hindrance to development. Despite being endowed with abundant natural and human resources, Tanzania still wallows among the poorest and donor-dependent countries. Still, there are improvements in infrastructure: Impressive buildings are coming up every day and roads are being improved. Yet the majority of people are still poor and social services fall short of requirements.

This implies that the government has not managed yet to translate the growing economy into better standards of living for ordinary Tanzanians. Even when people are employed, the majority fall in the category of the so-called working poor.

They could be earning a decent salary but when it is distributed among their dependants, the average income per day is hardly $2. Many workers in both the public and private sectors belong to this category.

That is why we have a legitimate expectation to suppose that this forum will teach us something new that we can readily implement at home. It will be a betrayal of Tanzanians if nothing tangible comes out of this Smart Partnership Dialogue.

Too much politicking

Let the government take a leaf from national and international experts and bring about changes in our country. Let us pull out all the stops and address our problems more effectively.

To get to that point, we will have to identify our weaknesses and turn them into stepping stones. We have many experts who can help us do this, but we have the impression that the government is not using them properly. There is too much politicking even in issues that need expertise. As a result, we often lose the opportunity to make things move from the grassroots.

While opening the Smart Partnership Dialogue on Friday, President Jakaya Kikwete stressed the need for African governments to invest in home-grown technologies--innovation--since imported ones are too costly for us.

This was a brilliant idea. But we can do this only if we invest adequately in education for this is the only way to keep Tanzanians abreast with global developments and address emerging challenges for knowledge is power. It is the only way to think big and transform our fledgling economy into a middle class one

Mixed views as Arusha left out of Obama’s TZ itinerary

President Obama 

In Summary

 “You don’t narrow yourself to regions or cities. Whenever he will be, the fact is that he will be visiting Tanzania, and I believe his discussions with government officials will be for the benefit of the entire country,” said Mr Brown ole Suya, a local politician.

Arusha. He will not visit Arusha like his two immediate predecessors, Bill Clinton and George W. Bush, and the city’s residents, understandably, have mixed views.

 “You don’t narrow yourself to regions or cities. Whenever he will be, the fact is that he will be visiting Tanzania, and I believe his discussions with government officials will be for the benefit of the entire country,” said Mr Brown ole Suya, a local politician.

The politician-cum-commercial farmer from Simanjiro District in Manyara Region said he does not regret that Obama will skip the city dubbed the ‘Geneva of Africa’ by the then President Clinton when he visited Arusha in August 2000.

“Arusha is part of Tanzania. It is not an independent republic. We (in Arusha) will benefit because Tanzania will benefit. The only loss for our city is that hotels will not be full like when we hosted US presidents in the past,” he said.

Like many people, Mr Suya believes President Obama’s visit will benefit Tanzania immensely, saying he was coming here with specific purpose.

He still recalls his encounter with President Bush in 2008 during the latter’s visit to Arusha.  It was at the venue of projects targeting the Maasai women, specifically those run by the Maasai Women Development Association.

“Bush was here, and the US government has since provided much support in educating Maasai children, especially the girls, but it’s not bad that Obama will not be coming here,” he said.

Mr Sirili Akko, the executive officer of the Tanzania Association of Tour Operators (Tato), a powerful lobby group based in Arusha, said it was a good thing that Obama had excluded Arusha from his visit.

“For the sake of the tourism high season (which has just started), it is good that he will not be coming to Arusha. His visit would have brought chaos on our roads as it happened the other day when Bush was here,” he said. He quickly added: “This does not mean that we don’t like his coming to Tanzania. Our country stands to benefit from the visit.”

During the time the US President would be in the country, Tanzania would be promoted as a safe and secure destination for tourists,” Mr Akko said.

“It (the visit) will help remind the world that Tanzania is one of the most endowed countries in the world as far as natural resources and tourist attractions are concerned,” he said, noting that tourism was not the only sector that would get global attention.

“Obama’s presence here will raise global awareness that Tanzania needs responsible investors who will promote good governance, human rights and welfare of surrounding communities through their investments.”

Obama granny expected in Dar

President Obama 

By Mkinga Mkinga, The Citizen Reporter   

In Summary

Speaking to The Citizen on Sunday, Foreign Affairs and International Cooperation minister Bernard Membe confirmed the report and said she was set to arrive at the Julius Nyerere International Airport yesterday.

Dar es Salaam. Tanzania was set to receive Mama Sara Obama, grandmother of the US President Barack Obama, yesterday in Dar es Salaam, this paper can report exclusively.

Speaking to The Citizen on Sunday, Foreign Affairs and International Cooperation minister Bernard Membe confirmed the report and said she was set to arrive at the Julius Nyerere International Airport yesterday.

The US government asked Tanzania if she could also be part of the President Obama’s family members during his two-day state visit.

“It’s true that we have received the information and immediately we responded positively that we have no objection to Mama Sara becoming part of the delegation....she is set to jet in today (yesterday) with her clinical assistant,” Mr Membe said

Mama Sara Obama will meet her grandson President Obama, who will not visit Kenya, his father’s country of birth. So she will be together with US First Lady Michelle, two daughters Malia and Sasha and close aides.

Mama Sara, lives in Nyang’oma Kogelo village, 30 miles west of western Kenya’s Kisumu town. She is the second wife of the president’s paternal grandfather. President Obama lovingly refers to his grandmother as “granny” in his memoir, “Dreams from My Father.”

President Obama is set to arrive in Tanzania tomorrow. Tanzania is expected to sign a multi-billion shilling deal with the Millennium Challenge Corporation.

US rating lowest in Tanzania, says study

US President Barack Obama and First Lady Michelle Obama walk off Air Force One with their daughters Malia (left) and Sasha, followed by Marian Robinson (2nd right) during an arrival ceremony at Waterkloof Air Base in Centurion, near Pretoria on Friday. PHOTO | AFP 

By The Citizen Reporters 

In Summary

The Washington-based research group Gallup says Tanzanians are the least approving of US leadership among residents of the three nations that Obama is touring for his first major official state visit to Africa.

Dar es Salaam. Visiting US President Barack Obama will tomorrow face Tanzanians whose rating of American leadership has significantly dropped, according to a new study.

The Washington-based research group Gallup says Tanzanians are the least approving of US leadership among residents of the three nations that Obama is touring for his first major official state visit to Africa.

Their approval dropped to 70 per cent in 2012 from a high of 89 per cent in 2009, the year Obama was sworn into office for his first term as the first African-American US President. But the study findings released on Friday show Tanzanians’ current approval level of the US is still higher than it was during the George Bush administration that Mr Obama succeeded.

 The rating for the younger Bush was 62 per cent in 2007, and as low as 47 per cent in 2004. According to Dr Ayub Rioba of the School of Journalism and Mass communication, University of Dar es Salaam, there might be a number of reasons for the drop but the main one could be disappointment.“Tanzanians and Africans at large saw the victory of Obama as one of the long-awaited solutions to their problems,” he said.

“To their surprise, Africa received little attention in his first term in office. He is an American president and was and still is directed by his country’s foreign policy.”

The chairperson of opposition Civic United Front (CUF) and renowned economist Prof Ibrahim Lipumba agrees that disappointment played a crucial part in the poor approval rates. “Africans see Obama as one of their own and for him to provide little for Africa was a major blow to Africans,” he said. “They forget it is all about foreign policy requirements and priorities.”

Prof Lipumba believes the 19 per cent drop is a small margin compared to what the Obama administration has done for Africa. He adds: “Bush did more good things than Obama for Africa and Tanzania but he still has poor rates compared to Obama. Africans still love Obama, regardless of the little help they have received so far.”

The survey involved face-to-face interviews with 1,000 adults aged 15 and older and was conducted in Senegal in March 2012 and in Tanzania in June 2012 and with 2,000 adults aged 15 and older in South Africa in March 2012 and November 2012. Gallup surveyed 1,000 respondents in each country in prior years. It had a +2 to +6 percentage point margin of error.

Approval in all the three countries--Senegal, South Africa and Tanzania--dropped from the highs seen in 2009-2010, meaning the US leader will likely face less enthused people in his visit than he would have years back when his victory galvanized the African continent, who easily identified with his roots.

In Senegal, Obama’s first stop, approval of US leadership was still substantially high at 80 per cent in 2012, down from 2009, when it stood at 87 per cent. About three-fourths of South Africans or 76 per cent approved of US leadership in 2012, much lower than the high of 92 per cent seen in 2010 to represent the highest drop among the three countries in Obama’s itinerary.

Gallup says the trend in approval ratings in Senegal, South Africa, and Tanzania is in line with what the organisation finds throughout the sub-Sahara region. It noted that the median US leadership approval rating among populations in the region fell to 70 per cent in 2012, from 74 per cent in 2011, and from a high of 85 per cent in 2009.

“It is now about where it was in 2008, and a bit better than the 62 per cent median approval in 2007,” says Gallup. Among all global regions, though, approval of US leadership remains among the highest in Africa.

“Whether it stays that way, though, may rely heavily on whether President Obama makes a strong and lasting impression during his trip--and follows it up with more engagement with the region on the issues its leaders and residents care most about,” it said.

Meanwhile, preparations were ready ahead of the highly anticipated visit by the Obamas, who arrive tomorrow.

Think beyond agriculture, leaders told

 

By Frank Kimboy, The Citizen Reporter 

In Summary

• Ugandan President Yoweri Museveni said during the ongoing global partnership dialogue that the sector has been losing ground as the foundation of African economies due to challenges such as limited land.

Dar es Salaam. African countries have been warned against relying too heavily on agriculture as the driver of the continent’s growth.

Ugandan President Yoweri Museveni said during the ongoing global partnership dialogue that the sector has been losing ground as the foundation of African economies due to challenges such as limited land.

He advised participants to set their sights on areas such as industrial networks. The Uganda president said he was disappointed that most of Africa’s leaders have held up agriculture as the backbone of Africa’s economic development when they know full well that there are land problems. “Nearly the entire continent is experiencing land conflicts, which have worsened the agriculture sector,” he added. “We should look for alternatives; one day, Africa will find itself at a crossroads economically due to lack of land.”

President Museveni cited the Kenya situation, where land ownership is a big bone of contention. Protests that most of it is in the hands of a few land barons rise by the day. “My fellow Africans, let me ask you when we will stop relying on agriculture as the engine to push forward our development,” Mr Museveni added.


“Haven’t you seen land problems that we have been encountering? Look at Kenya and Nigeria, where the source of conflict is basically land.”

He also called on African countries to invest in human resources instead of depending on natural resources as the path to economic prosperity.

Tanzania’s minister for Communication, Science and Technology, Prof Makame Mbarawa, urged African countries to identify the kind of technology necessary for Africa’s development so they can establish how much investment is required.

Briefing reporters after the closed-door meeting, Chief Secretary Ombeni Sefue said participants discussed the importance of leadership skills in the pursuit of development. They reportedly identified political willingness to accept change as one of the key factors in economic prosperity.

Picha kamili ujio wa Obama

Rais wa Marekani Barack Obama akiwasalimia wasanii wa nchini Senegal juzi alipotembelea kisiwa cha Goree, kilichopo pwani mjini Dakar alipokuwa ziarani nchini humo 

Na Florence Majani, Mwananchi  (email the author)

Posted  Juni29  2013  saa 7:16 AM

Kwa ufupi

• Mkurugenzi wa Uwanja wa Ndege wa Mwalimu Julius Nyerere, Moses Malaki aliliambia gazeti hili jana kuwa matayarisho ya ujio wa Rais huyo ni kabambe na hayajawahi kutokea katika historia ya Tanzania.

Dar es Salaam. Wakati magari 150 ya msafara wa ziara ya Rais Barack Obama yamewasili nchini, majina ya mawaziri wa Tanzania yatakayoruhusiwa kumpokea kiongozi huyo kuchujwa na makachero wa FBI.

Mkurugenzi wa Uwanja wa Ndege wa Mwalimu Julius Nyerere, Moses Malaki aliliambia gazeti hili jana kuwa matayarisho ya ujio wa Rais huyo ni kabambe na hayajawahi kutokea katika historia ya Tanzania.

Pia alisema shughuli za kumpokea Rais Obama, anayetarajiwa kutua Jumatatu saa 8:40 mchana, zitaanza asubuhi kwa maofisa wa Marekani kushika majukumu yote katika uwanja huo, ikiwemo kuongoza ndege, ukaguzi wa abiria na mizigo, kwa maana wafanyakazi wa uwanja huo kuwa likizo kwa siku mbili.

“Wamesema kuwa wao watasimamia kila kitu kuanzia wageni watakaoingia na kutoka na wataamua nani aingie na kutoka,” alisema Malaki.

Aliongeza kuwa japokuwa Mamlaka ya Anga Tanzania (TAA) inaendelea kufanya kazi zake kama kawaida, lakini Jumatatu, Wamarekani watasimamia kila kitu hadi ukaguzi wa wageni.

“Siku hiyo mwongoza ndege wa TAA, atafanya shughuli kidogo, mambo mengine yatafanywa na wao,” alisema.

Idadi ya maofisa wa Tanzania

Imebainika kuwa hata idadi ya maofisa wa Tanzania wakiwemo viongozi watakaompokea pia itapangwa na Wamarekani wenyewe.

“Wenyewe wana orodha yao na wanajua nani atakuwepo au hatakiwi kuwepo katika kundi la wageni watakaompokea Rais Obama,” alisema na kuongeza:

“Nilimuuliza Ofisa Usalama wa Marekani iwapo nitaweza kumwona Rais Obama, akaniambia: Utamwona ukibahatika kuwepo kwenye orodha.”

Waziri wa Sheria na Katiba, Mathias Chikawe naye alikiri kuwa mawaziri wanaotakiwa kuwepo katika msafara wa kumpokea Rais Obama ni wachache watakaochaguliwa tu na Wamarekani, baada ya kuyapitia na kuyachunguza majina hayo kwanza kabla ya kuyakubali.

“Hii sijawahi kuiona, hata sisi wenyewe tunateuliwa na wakishayapitia wataamua, nani aende au asiende,” alisema Chikawe.

First Lady calls for new strategies against new HIV infections

By Eugene Kwibuka

(L-R) First Lady, Jeannette Kagame, Sidibe and President Banda at the meeting. Sunday Times/Timothy Kisambira

The First Lady, Jeannette Kagame, has called on actors in the global anti-AIDS movement to leverage on what has been achieved in the prevention and dealing with effects of HIV/AIDS in order to design effective strategies to avoid new infections.


She was speaking at the first meeting of the UNAIDS and LANCET Commission which was hosted by President Joyce Banda of Malawi in the country’s capital Lilongwe on Friday and Saturday this week.
The commission was launched in May 2013 to draw lessons from the AIDS experience and find ways to move to sustainable health.


The commission’s goal is to prescribe ways of using resources available for HIV/AIDS to build stronger and more sustainable health systems in order to realise targets of zero new HIV infections, zero discrimination and zero AIDS-related deaths.


Mrs. Kagame is one of the commission’s 30 commissioners that includes politicians, scientists and donors.
“Today is approximately one generation after the first incident of HIV occurred. We are here to shape the debate on the future of global health,” she said.


She highlighted achievements in the fight against HIV/AIDS such as the mobilisation of communities to stand against the scourge, prevention of mother to child transmission, as well as care and advocacy for children, mothers, and families infected and affected by HIV/AIDS.


“As 2015 nears and with that, the close of the Millennium Development Goals, this is a critical time to be thinking about the challenges that still remain; perhaps the most pressing one is the issue of how to strengthen what we have built and make it more sustainable,” she said.


She highlighted Rwanda’s achievements in the fight against HIV/AIDS such as reducing HIV prevalence from 12 percent to 3 percent and reducing to a half new HIV infections from about 20,000 a year 2000 to around 10,000 infections in 2011.


The achievements also include a six times increase in the trend of testing among young women which moved from about 10 percent in 2005 to almost 60 percent in 2010.  Prevention of Mother to Child transmission (PMTCT) services are also available in 85 percent of all health facilities in Rwanda.


The First Lady partly attributed Rwanda’s success in the fight against HIV/AIDS to community medical insurance scheme, Mutuelle de Santé, which makes healthcare more accessible as well as the use of thousands of Community Health Workers across the country to sensitise and teach members of their communities about HIV prevention, testing and adherence to treatment.


She recommended the universal access to healthcare, more scientific research and strong regulatory systems in Africa to have a strong health sector.


As a joint project of the United Nations Programme on HIV/AIDS (UNAIDS) and leading medical journal, The Lancet, the UNAIDS and LANCET Commission works to explore the post-2015 agenda of AIDS and global health.


The commission is co-chaired by Malawi President Joyce Banda, African Union Commission Chairperson Nkosazana Dlamini Zuma, and the Director of London School of Hygiene and Tropical Medicine, Peter Piot.


Its policy prescriptions on the way forward in fighting against the disease after 2015 will be inspired by a diverse group of HIV and health experts, young people, activists and political leaders.
Contact email: eugene.kwibuka[at]newtimes.co.rw

Districts outline performance targets

• By Jean de la Croix Tabaro

Women posing in a group photo with Mutuelle de Santé. Districts have promised to increase health insurance coverage. The New Times/File

District mayors across the country plan to increase agricultural production as part of efforts to uplift people out of poverty.


The revelation is found in districts’ draft performance targets – locally known as Imihigo – presented to Prime Minister Dr. Pierre Damien Habumuremyi this week in Kigali.


The targets were presented during a planning meeting that drew the local government and the central government institutions.


Governors of provinces and the Mayor of the City of Kigali highlighted their performance targets of their respective districts in order to enable the central government see whether the priorities suggested to the districts were captured and for districts to suggest what support was needed for greater implementation.
According to highlights, the districts promise to increase health insurance coverage Mutuelle de Santé, support the needy, and increase TV penetration, among other things.


Prime Minister Habumuremyi commended the mayors for the efforts they put in the implementation of their performance contracts.


Some points however were identified as cross cutting issues in all the provinces, especially due to the centralisation of some activities at ministerial or institutional level, which at some point the participants found frusttated implementation.


The Director General of good governance in the Ministry of Local Government (MINALOC), Fred Mufuruki, and his team have identified some issues that need to be fixed as they assessed the quality of target pledges.


Several districts were reluctant to make pledges about roads because they didn’t have enough information about contracts and tenders from the institution in charge of roads, the Rwanda Transport Development Authority (RTDA).


The same problem was also recently raised in the retreat of the Kigali City councillors and Mufuruki said that it was clear districts were avoiding making some errors in planning things that would mismatch with the available budget.


That’s why the roads Vunga-Nyakinama in the Northern Province and Ngororero-Rutsiro in the Western Province were not completed as part of planning initiatives in districts.


Again in infrastructure, districts that have airport projects like Rubavu, Rusizi, and Bugesera were not handling expropriation properly.


Also, districts avoided planning for asbestos eradication because they had no roadmap of the activities it requires, while others had not planned enough in developing kitchen stoves, waste management, biogas and rural electrification.


The Prime Minister advised the districts to take over full implementation and the central government would give them technical support.


He assigned concerned ministries to sit with the Ministry of Local Government and address all outstanding issues so that all districts can present final drafts of their performance contracts on July 10.

Umuganda foundation of dev’t, says Kagame

• By Frank Kanyesigye

President Paul Kagame has called upon Rwandans to continue participating in the monthly community work locally known as ‘Umuganda’ because it is one of the important drivers of the country’s development.
The Head of State made the remarks yesterday while addressing hundreds of residents of Nyarugunga Sector in Kicukiro District where he participated in community work.


Accompanied by other government officials, the President joined residents in the construction of a 2.5 kilometre road that connects to the village of ex-combatants in Nyarugunga Sector with the main Kigali-Kanombe road.


“Development is our priority and it will be achieved through self-reliance,” Kagame said, encouraging the people to carry on community work while they applauded in approval of his call.


Highlighting that development comes from positive thinking, the Head of State pointed out that the support towards the construction of Nyarugunga Primary School in Kanombe Sector resulted from the community work.


“One of the benefits of Umuganda was the construction of the school because the person who supported us to build the school came up with the initiative during community work. If we were not participating in Umuganda, we wouldn’t have got that support,” he explained.


He was referring to Ugandan President, Yoweri Kaguta Museveni, who pledged US$300,000 (about Rwf193 million) towards construction works at Nyarugunga Primary School in Kanombe Sector. Museveni made the pledge at a community work to build classrooms in the area while he was on a State visit to Rwanda in July 2011.


“We Rwandans know our challenges and have the will to address them within our means. What we need is to put everything into practice, and nothing will stop us from realising our goals,” the President noted.
He said that in community work every Rwandan expresses their wish to develop their country and move forward for a better life.


Kagame explained that Umuganda should be a culture and nobody should remind anyone to participate in the activity since everyone is supposed to know its benefits.


“This is the support every Rwandan should give to their country because the benefits are immense and are for all Rwandans,” he said.


According to Paul Jules Ndamage, the Mayor of Kicukiro District, the work done towards the construction of the road during Umuganda is valued at about Rwf 5 million.


“We thank the Head of State for his continuous support during community work. His participation gives us courage and motivation to build our country,” the mayor said.


 The road will help ex-combatants who live with disabilities to access both the main road and the Rwanda Military Hospital with ease, Ndamage said.


Theoneste Ndagijimana, one of the residents, appreciated that President Kagame took time off to join them at Umuganda.


“He is a great leader who works together with people to build the nation. I couldn’t believe seeing our president digging trenches. It was very exciting,” he said.

Chinese Ambassador joins Senators in Umuganda

• By Triphomus Muyagu and J d'Amour Mbonyinshuti

Chinese envoy, Shu Zhan, during Umuganda in Rulindo. The Sunday Times/Jean d’Amour Mbonyinshuti

The outgoing Chinese Ambassador to Rwanda, Shu Zhan, and some Rwandan Senators yesterday joined residents of Rusiga Sector in Northern Province’s Rulindo District at the monthly communal work known as Umuganda.


Zhan commended the practice, arguing that the exercise was good for development because it provided a platform to talk about developmental issues and unifies people.


Hon. Bernard Makuza, the vice-president of the Senate, emphasised the importance of Umuganda, an exercise that he considers vital for the country’s development.


“Rwanda has a goal of aiming for development and working hard in order to move from one point to another in striving for prosperity,” he told residents of Rusiga.


The Senator thanked the residents for joining hands to repair their roads which will help them get access to other communities around Rusiga Sector.


The Mayor of Rulindo District, Justus Kangwagye, appreciated the support and good relationship between China in Rwanda.


The Chinese intervention in the district has so far focused on Inyange Girls School of Science which teaches its students the culture and history of China among other courses.

Juba and Addis: Why the coffee smells so strong in the north

Top left: Launch of the Lapsset project in Lamu; Construction site for a new railway in northeastern Ethiopia that will connect Addis Ababa to Djibouti’s Red Sea port (bottom left); and Djibouti harbour. Photos/FILE  

By Christine Mungai and Charles Onyango-Obbo The EastAfrican

In Summary

• In our continuing series on the future of Greater East Africa, we look at how security, energy and water have combined to create a northern magnetic pull on the region.
• Two years ago, several new impetuses emerged. First, South Sudan became Africa’s newest independent state on July 9, 2011. Then last year, Kenya announced it had found oil in Turkana.
• Production is to start in six or seven years, but profitability will largely hinge on Kenya’s ability to realise the $25 billion Lamu Port and Lamu-Southern Sudan-Ethiopia Transport corridor (Lapsset) mega-infrastructure project linking Juba and Addis Ababa to the Lamu port.

Related Stories

• Who will be the engine of Greater East Africa?
• East Africa’s future: The pull of the north

At one point in the mid-1990s, it seemed that the Democratic Republic of Congo would settle down, and with its vast mineral wealth — estimated to be $24 trillion, more than the GDP of Europe and the US combined — would determine the shape of the wider East African regional economy (See: The future shape of East Africa: What happens when the sleeping giant of Congo awakes, The EastAfrican, June 22-28).

That, however, was not to be and the investment in a more traditional East African Community of Kenya, Tanzania, and Uganda gathered steam.

But the late 1990s were very different from the 1970s, when the first EAC folded. By the mid-1990s, Kenya was home to more than 500,000 Ethiopian, Somali and Sudanese refugees, and there were more than 150,000 Sudanese refugees in Uganda.

Moreover, the war between the Sudan People’s Liberation Army and the Khartoum government was raging furiously. The SPLA leadership had set up regional political headquarters in Nairobi.

READ: How 'new’ East Africa was born out of the fires

Uganda had been drawn into providing the SPLA with active military support. In retaliation, Khartoum adopted and armed the anti-Kampala rebel group, the brutal Lord’s Resistance Army (LRA).

The rebellion in northern Uganda, and the war that brought President Yoweri Museveni to power at the head of a victorious army in 1986, had produced several thousand refugees, some of whom had been relocated to camps in Ethiopia.

Kenya’s president then, Daniel arap Moi, was going to retire in 2002 after a new political deal with the opposition limited his continued stay in office. To his credit, Mr Moi understood as well as some of the best geopolitical strategists in the region, that the security of East Africa and its economic future lay in a regional solution to the war in Sudan, and a negotiated settlement of the Somalia crisis.

It took a while to come together, but the Somalia and Sudan peace talks eventually began in Nairobi in 2001.

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Indeed, the Intergovernmental Authority on Development (Igad) was created in 1996 to supersede the Intergovernmental Authority on Drought and Development (Igadd) which was founded in 1986. The membership of Igad — Djibouti, Eritrea, Ethiopia, Kenya, Somalia, Sudan and Uganda — drew in two of the countries that were working on reviving the EAC. Only Tanzania was out of it.

Geopolitical forces

In many ways, there was an understanding that the EAC of three would only be shortlived, given the regional realities. In addition to these geopolitical forces, with East African countries, especially Kenya, plagued by food crises, Tanzania rushing to expand agriculture as its population became the largest in East Africa, and Uganda’s economy that had seen double-digit growth beginning to be hobbled by power shortages, the Nile and what lay north of it were becoming even more important than before.

Kenya’s case in particular was, and remains, particularly striking. While it was being battered by food shortages, the underlying problem that it was contending with was water stress.

The Lake Victoria basin in Kenya covers only 8.5 per cent of the total area of the country, but it contains over 50 per cent of its national freshwater resources. Thus, while Lake Victoria, and therefore the River Nile, do not figure as big in Kenya’s political and security conversations as in Uganda’s and Ethiopia’s, the lake’s continued productivity is a greater existential issue for Nairobi.

Security, energy and water combined to create a northern magnetic pull on the region and, two years ago, it started getting several new impetuses.

Africa the spectator as titans US, China clash

US President Barack Obama (right) with Chinese counterpart Hu Jintao. The battle for Africa is not one for present resources but future potential. The real contest is between China’s hard power and America’s soft power. Photo/REUTERS 

By DANIEL K. KALINAKI The EastAfrican

In Summary

• US President Barack Obama, scheduled to speak at the University of Cape Town on Sunday, is expected to outline his vision of America’s engagement with a resource-rich continent where China’s influence has potential implications for not only economic growth and development, but the nascent experiment with democracy and institution-building.
• China overtook the US as sub-Saharan Africa’s largest trading partner in 2009 but both remain key markets, with total trade between the three regions increasing every year over the past decade or so.

As the Chinese make deep inroads into Africa, America is counting on soft power — and the continent’s young people — to stay on top.

When the United States ambassador to Uganda, Scott Delisi, arrived in Kampala last year, it took about four weeks before a slot could be found for him to present his credentials to President Yoweri Museveni.

When his Chinese counterpart, Zhao Yali, arrived in Kampala, it took only four days. There is perhaps little to read in such minor details beyond scheduling difficulties but there is no doubt that China’s influence in Africa has grown significantly, on the back of Beijing’s infrastructure diplomacy.

US President Barack Obama, scheduled to speak at the University of Cape Town on Sunday, is expected to outline his vision of America’s engagement with a resource-rich continent where China’s influence has potential implications for not only economic growth and development, but the nascent experiment with democracy and institution-building.

China overtook the US as sub-Saharan Africa’s largest trading partner in 2009 but both remain key markets, with total trade between the three regions increasing every year over the past decade or so.

America’s trade with Africa rose from about $30 billion in 2001 to just over $100 billion 10 years later, while China’s grew more dramatically, from about $10 billion to about $130 billion over the same period, according to collated figures from the UN and other official sources.

President Obama is unlikely to announce any major departures from the existing US policy towards sub-Saharan Africa, which has at its core an emphasis on building democracy, promoting development, supporting commerce, and strengthening security.

The US already has major policy instruments in its dealings with Africa, including the President’s Emergency Fund for Aids Relief (Pepfar), the Africa Growth and Opportunity Act (Agoa), the Millennium Challenge Act and at least two more recent initiatives on food security and climate change.

A lot has been made of China’s growing influence in Africa and its policy of non-interference in domestic political affairs, which makes it an attractive partner for many of the continent’s less-than-democratic leaders.

However, the political and economic parallels between China and the US in Africa need to be put into context.

In reality, there is very little direct competition between Chinese and American firms in Africa. Most of the US firms are involved in the higher-end of the market, such as renewable energy, computer software and medical equipment, while Chinese firms dominate the lower, consumer-goods category.

The point of confluence is oil. But here again both the US and China simply dominate the trade in Africa’s natural resources. A lot of the growth in trade over the past decade has been fuelled by an increase in exports of crude oil from Africa to the two powers.

The difference is that China has diversified its appetite for other natural resources and grown its exports to Africa much faster, overtaking the US in this area a decade ago in 2003.

The bigger story about China and US interest in Africa is actually the lack of effective African presence in the US and China markets.

Although the two countries have gradually opened the door to duty-free exports to their markets, African countries still export very little and when they do it is mostly raw materials like crude oil, timber and mineral ores.

Presidents agree to fast track EA political federation

From left: Presidents Yoweri Museveni, Uhuru Kenyatta and Paul Kagame. Analysts say the Entebbe proceedings indicated the first clear move to break away from the laborious consensus model of the EAC, to one where there is a “leading tendency” by a willing few. Photos/FILE  NATION MEDIA GROUP

By JOINT REPORT The EastAfrican

In Summary

• The three leaders agreed to fast-track plans for a political federation, alongside the more organic evolution of the Common Market into a monetary union, promising to put “accelerated energy into implementing it.”
• Each of the three presidents was given cross-border responsibilities: Kenya takes the lead on the pipeline and electricity generation and distribution; Rwanda on the Customs, single visa and EAC e-identity card; and Uganda the railway and political federation.
• Analysts say the Entebbe proceedings indicated the first clear move to break away from the laborious consensus model of the EAC, to one where there is a “leading tendency” by a willing few.

Apart from agreeing to push ahead with bilateral and tripartite infrastructure projects, Presidents Yoweri Museveni, Paul Kagame and Uhuru Kenyatta also struck a deal to fast-track plans for a political federation during their meeting in Kampala, which has been described as “a breakthrough.”

“I think it will be a breakthrough because we have been going round and round in circles,” Uganda’s Foreign Affairs Minister Sam Kutesa told The EastAfrican.

The three leaders agreed to fast-track plans for a political federation, alongside the more organic evolution of the Common Market into a monetary union, promising to put “accelerated energy into implementing it.”

They are expected to formally sell their position to their counterparts, Presidents Jakaya Kikwete of Tanzania and Pierre Nkurunziza of Burundi, who were not present at the Kampala meeting.

READ: Political unity talks to begin in November

Informal discussions were expected to take place as early as the last weekend of June during the Smart Partnership Dialogue in Dar es Salaam, which Presidents Kenyatta and Museveni were expected to attend.

The need to reaffirm the commitment to a political federation appears to have been prompted earlier this year when Tanzanian journalist Timothy Alvin Kahoho went to the East African Court of Justice and argued that the Heads of State Summit had violated the EAC Treaty in asking the Secretariat to draw up a roadmap to a political federation.

Although the court threw out the application, sources familiar with the matter say some of the actors keen on political federation saw this as an attempt to filibuster the process and sought to test support for the project among some of the principals.

The three presidents reaffirmed that support in a joint communiqué issued after the meeting and Mr Kutesa indicated in his comments to The EastAfrican that the deliberations were partly informed by regional events.

“We are reiterating some of the decisions that had been made, that the EAC Secretariat makes some kind of road map, especially now that the court has ruled on the recent case,” he said.

Officially, the meeting was not an EAC Summit and any decisions agreed upon that impact on the operations of the Community will have to be presented and formally discussed at the next Heads of State Summit in
 November. However, the three countries are free to pursue the more bilateral aspects of their agreements.

Officials in Kampala downplayed the absence of Tanzania and Burundi, pointing out that most of the deliberations were about infrastructure projects along the Northern Corridor.

But frustration with the slow turnaround of regional projects was evident in the words of one regional official.

READ: State of the EAC: Too many delays

“We have been talking of upgrading the railway for 10 years and nothing has been happening,” he told The EastAfrican. “We have to break the cycle of talking and talking.”

Learn key ethics of corporate rule

A company’s board must be very transparent in how it runs its affairs. FOTOSEARCH 

By CATHY MPUTHIA

The law provides that a company must have at least two directors in its board. In most simple firms there are two directors and a company secretary. However, in larger companies, the board is diversified with a lot of the members having technical qualifications.

It is therefore important for businesses to have proper governance mechanisms in place so as to ensure that the board or whatever other governing structure of the organisation is run well for maximum benefit of its shareholders.

The board remains liable for all decisions taken, to the shareholders, who are the actual owners of the company. In some cases the owners of the company are the same people who sit on the board. In such companies then there is little asymmetry of information between the board members and the shareholders.

In what is becoming a common trend today, shareholders are increasingly leaving the running of their company to experts. In such companies, the board needs to be very transparent in how it runs its affairs. The role of the board and mechanism of appointing its members of most companies is set out in the Articles of
 Association. When a company is being incorporated then one of the mandatory forms that accompany the registration documents is Form 203 which has the particulars of the board members as well as corporate secretary. The shareholders can appoint new directors to the company by way of shareholders resolution.

In other organisations the incorporation documents also set out the role of the governing board. For partnerships, the partnership deed sets out the role of the partners. Your lawyer will help you draft suitable deeds. In the absence of these documents in the event of a dispute the applicable law will be resorted to.

The Companies Act has more elaborate provisions concerning directors. There are some prohibited actions by directors and not all persons can serve as directors.

Directors owe the shareholders a number of duties as set out in principles of corporate governance.

The international principles of corporate governance provide that one of the principles for directors is to manage the affairs of the company in a transparent manner. This means that any information that would affect the value of the company significantly should be released to the shareholders.

Another principle of corporate governance is accountability. Directors remain accountable to their shareholders for any actions taken by them. There is increased litigation concerning management of companies, perhaps due to shareholder activism and knowledge of rights.

Coffee, tea farmers face sharp drop in earnings as prices fall

A farmer inspects her coffee plants. A coffee farmer in Nyeri . Coffee prices have dropped. Photo/FILE 

A farmer inspects her coffee plants. A coffee farmer in Nyeri . Coffee prices have dropped. Photo/FILE 

By GEOFFREY IRUNGU

Coffee and tea prices have fallen by 33 per cent and 26 per cent since the beginning of the year, signalling a sharp drop in farmers’ earnings.

Coffee farmers are expected to be hit much harder by a corresponding drop in production volumes, but an increase in tea harvest over a similar period last year is expected to ease impact of the price drop.

According to the leading economic indicators from the Kenya National Bureau of Statistics (KNBS), coffee prices were down to Sh229.83 per kilogramme (kg) in May from an average of Sh344.30 per kilo in January.

Managing director of Thika Coffee Mills, David Wafula, attributed the drop in prices to lower quality of coffee beans produced in the period.


“From December to a part of February, the quality of the beans wasn’t that good,” said Mr Wafula. The fall in prices has almost been by the month except in March when it rose compared to February, but still remained below January’s figure.

The coffee quantities have also been lower in the first five months of this year totalling 23,358 metric tonnes against 24,865 metric tonnes realised in the same period last year.

The total value of earnings for coffee farmers was Sh6.94 billion compared to Sh9.58 billion in the same period last year —Sh2.64 billion less.


“The quantity of coffee auctioned at the Nairobi Coffee Exchange [auction firm] declined from 6,038 metric tonnes in March 2013 to 4,483 metric tonnes in April 2013 while its average auction price fell from Sh278.89 per kg to Sh229.83 per kg in the same period,” said the KNBS data.

Mr Wafula said production of the crop is expected to increase in the remainder of the coffee year which ends in September.


“We believe the total coffee production will be significantly higher than last year,” said Mr Wafula.

Production

The decline in tea prices has been steady since January but the production volume has varied during the four months, even though it has remained generally higher than in the same period last year. Prices fell to Sh210.09 per kg from Sh284.11 in January.

In January, tea production stood at 45,390 metric tonnes but had dropped to 38,230 metric tonnes in April. In relation to last year, the quantities are higher due to the better rains this year.

In April alone, tea prices fell to Sh210 from Sh240 a kg in March, representing a 12.5 per cent change— the single largest fall since the beginning of the year. The fall also came with an increase in quantities during the month.

“The quantity of processed tea increased from 33,368 metric tonnes in March 2013 to 38,230 metric tonnes in April 2013 while its average auction price dropped from Sh240.73 per kg to Sh210.09 per kilo over the same period,” said the KNBS data. The onset of the rains and reduced demand in countries that are approaching the summer season—when there is less demand for hot beverages—was also said to have affected demand.

“Good weather since late last year has contributed to the fall in prices. Countries such as Egypt, which buys our tea in large quantities, couldn’t afford to buy our expensive teas,” said the deputy general manager at Mombasa-based Prudential Tea Brokers (E.A.) Elvis Nduati.

“We are expecting things to change since the cold weather is here...it normally pushes up demand,” he said.

Rising cost of debt clouds Africa’s bid for Eurobonds

The Treasury building in Nairobi. In a year when a record number of African countries are lining up to join the Eurobond club, membership just got pricier. Photo/FILE 

By Tosin Sulaiman

In a year when a record number of African countries are lining up to join the Eurobond club, membership just got pricier.

After Zambia saw unprecedented demand for its debut $750 million Eurobond last September, some predicted that a rush of African issuers would tap international debt markets in 2013.

Rwanda was first out of the blocks, issuing a $400 million 10-year bond at a 6.875 per cent yield in April despite its B rating and a recent disruption to its foreign aid flows caused by some donors’ displeasure over Kigali’s alleged meddling in neighbouring Democratic Republic of Congo.

Ghana and Nigeria announced plans to return to the market after their debuts in 2007 and 2011 respectively, while Kenya, Tanzania, Uganda, Angola and Cameroon are also potential candidates.

(Read: Treasury to issue Kenya’s first eurobond in September)


But as the global economy comes to terms with a possible end to the US Federal Reserve’s bond-buying programme in 2014 and rising US Treasury yields have sparked a sell-off in emerging market assets any hopes that African governments held of borrowing at cheap rates are likely to be dashed. “The window of opportunity in accessing the Eurobond market by African sovereigns is closing,” said Angus Downie, Ecobank’s head of economic research.

“They’re going to have to face the reality that investors will want higher yields in order to invest in what they consider now to be slightly more risky assets.”

Demand for African Eurobonds is still expected to be solid given their scarcity and investors’ desire for diversification, but without the Fed’s stimulus, the days of outsized order books are probably gone.

Zambia, which launched its Eurobond on the same day the Fed announced its third round of quantitative easing, received $11.9 billion of bids, more than 15 times the issue size, while Rwanda’s bond was more than seven times oversubscribed.

“I would say the past 12 to 18 months were God’s gift to issuers and clearly things are slowly normalising,” said Nicholas Samara, vice president in capital markets origination at Citi. “Most likely you’re not going to see these $12 billion order books anymore. Simply put, we’re in a different world.”

Reflecting the new reality, yields on African Eurobonds have climbed significantly in the past month, by more than 100 basis points for Rwanda’s 2023 bond and nearly 300 basis points for Senegal’s 2021 paper.

Nigeria’s 2021 bond is trading at a yield of 5.9 per cent from a low of 3.66 per cent in January.


Africa’s biggest oil producer, which plans to raise $1 billion this year to fund infrastructure in the power sector, completed a European and US roadshow this week but will not issue yet given volatile market conditions.

When it eventually taps the market, it will pay a higher price than if it had done so earlier this year, but its strong fundamentals and familiarity to investors means the bond will be oversubscribed, analysts said.

Its domestic debt was about 18 per cent of GDP in 2012 and external debt 2.5 per cent of GDP, lower than its peers.

Inflation is in single digits and investors are optimistic about power sector reforms, seen as key to unlocking further growth potential in the Nigerian economy.

A dollar bond from Kenya, with its diversified economy and traditionally low levels of external debt, should be well received, but countries like Ghana that are struggling with high budget deficits will face more investor scrutiny, said Razia Khan, Standard Chartered’s head of research for Africa.

Power defaulters face court action over Sh8bn debt

A Kenya Power employee at work. The firm has threatened to sue defaulters from next week. File 

By BD REPORTER
 

 

Defaulting electricity consumers face court action as Kenya Power moves to recover bad debts estimated at Sh8 billion.

The power distributor has sent a notice to disconnect private companies, parastatals and households from the electricity grid next Monday, paving the way for legal action against customers who fail to pay three months after the cut off.

Kenya Power’s unpaid bills stood at Sh8.02 billion in the year to June 2012, down from Sh9.2 billion a year earlier, which was nearly double its full- year net profit of Sh4.6 billion.

The aggressive pursuit of defaulters comes as the utility firm seeks additional cash to compensate for the freeze on planned increases in electricity tariffs.

The halting of the tariffs is expected to put a strain on Kenya Power’s profit margins and the firm’s ability to revamp its ageing electricity network.

“The accounts’ closure will happen if the disconnection is done and there is no payment within three months. The legal process will be pursued thereafter,” said a Kenya Power executive on condition of anonymity since he is not authorised to speak for the firm. Large power users, including manufacturers, lead the list of defaulters at Sh4.4 billion from Sh6.2 billion, followed by ordinary customers whose debt stands at Sh2 billion from Sh1.5 billion.

This means that defaults within households have deepened despite a drop in overall debt. Parastatals are third with Sh1.18 billion, up from Sh1.14 billion. The combined bill of ministries and local authorities increased to Sh281 million from Sh150.4 million.

(Read: Kenya plans Sh200bn expansion of power grid)


“This notice applies to all customers including government departments and agencies, county authorities, industries and domestic customers,” reads the Kenya Power notice.

The Sh8 billion debt was arrived at after the utility, which is owned 50.08 per cent by the government, noted that Sh3.8 billion was unlikely to be recovered.

Kenya Power requires all its customers to deposit an amount equivalent to two times their monthly consumption to cover against the risk of default, with the minimum being Sh2,500.

But defaulters often consume beyond their deposit, leading to an increase in the doubtful debts. Customer deposits stood at Sh6.2 billion in June last year.

The company had 2.1 million households connected to the national grid by June compared to 1.75 million a year earlier and 1.46 million in 2010.

 Consumers living outside the 600-metre radius of a transformer will pay more to be connected to the electricity grid as Kenya Power seeks new revenue channels.

Read: Power connections set to cost more)




Kenya Power has been levying a fixed charge of about Sh34,980, for electricity connections under subsidised rates introduced in 2004 as a strategy to deepen access to electricity.

On May 9, Deputy President William Ruto stopped the firm from raising electricity tariffs, instead directing it to sort out operational inefficiencies and power losses.

Move to ease mining laws sparks fresh controversyMove to ease mining laws sparks fresh controversy

A titanium mining site at Maumba in Kwale County. The government’s decision to revise the controversial rule requiring foreign mining firms to cede 35 per cent ownership to local share-holding has drawn mixed reaction. Photo/File 

By EDWIN MUTAI

The government’s decision to revise the controversial rule requiring foreign mining firms to cede 35 per cent ownership to local share-holding has drawn mixed reaction amid calls for bigger benefits for communities living around project sites.

(Read: Foreign investors win battle for full control of mining operations)

Mining Secretary Najib Balala said last week the law introduced last October is among the key changes proposed to the Mining Bill being refined at the Attorney-General’s office. “I am keen to confirm that the Government of Kenya is repealing the 35 per cent local ownership rule after the completion of the mining Bill,” Mr Balala told a conference in London.

The rule introduced to help maximise the benefits from the fledgling sector triggered anxiety among
foreign-owned mining firms. Their main concern was the fate of investments that they had already made and how these would be shared with yet-to-be identified local partners. Kenya Investment Authority (KIA) managing director Moses Ikiara said the controversial local-ownership law risked deflecting investment from the country if not reviewed.

“How do you ask investors to come in yet you are imposing a 35 per cent local ownership requirement? Although there is a strong constituency who feel there should be local protection or ownership, we need to consult and look at best practices elsewhere and come up with an agreed position with regards to mining,” he told the Business Daily.

(Read: Clarify mining policy)

Mr Balala said the government would repeal the law to restore investor confidence in the competitive sector.

“A vibrant mining sector will create jobs and generate significant revenues for the government. We are here to crowd investors in and not out,” he said.

Nominated senator Agnes Zani however urged the government to ensure communities living around project sites benefited from the proceeds of the business. “The Mines and Minerals Bill is suggesting an 80 per cent allocation of proceeds to the national government and 20 per cent to the community while the 2012 Bill suggests 75 per cent to the national government and 25 per cent to the community. We need a harmonised structure so that communities don’t lose out,” she said.

Dr Zani urged the government to also review the royalty charges on key minerals to ensure the country benefited from its resources.


A draft of the Bill also proposed to increase royalties on minerals such as gold threefold. It also offered to have mineral-specific structure for royalty payments and charges, deviating from the current law where royalties are pegged at three per cent for all categories of gems. Kenya has more than 300 local and foreign firms prospecting for minerals or producing on a small scale, up from less than 30 two years ago, Kenya’s Chamber of Mines says.

The country has proven deposits of titanium, gold and coal and is also estimated to hold deposits of copper, niobium, manganese and rare earth minerals. Africa-focused gold producer Goldplat early this month said it had suspended its Kenyan operations to focus on cash-generating activities in South Africa and Ghana, due to low gold prices and uncertainty over the controversial law.

Spotlight on MPs as Treasury’s bid to tax flour, books is debated

The cost of food, medicines, electricity, books and agricultural inputs could rise sharply in the coming months if Parliament passes the VAT Bill 2013, which is to be tabled before it this week. 

By EDWIN MUTAI
 

 

In Summary

• The cost of food, medicines, electricity and agricultural inputs could rise sharply in the coming months if Parliament passes the VAT Bill 2013, which is to be tabled before it this week.
• The taxman will also levy a 16 per cent VAT on agricultural inputs that are currently zero-rated with the exception of fertiliser

The battle for the minds and hearts of Kenya’s bottom millions is expected in Parliament this week as MPs open debate on the Treasury’s fresh bid to tax basic goods and services, risking a general rise in consumer prices.

(Read: Kenyans oppose VAT on basic food items)


Treasury secretary Henry Rotich has set the stage for round two of a battle his predecessor, Njeru Githae, lost by including basic commodities in the list of goods that qualify to be charged Value Added Tax (VAT).

The cost of food, medicines, electricity and agricultural inputs could rise sharply in the coming months if Parliament passes the VAT Bill 2013, which is to be tabled before it this week.

The government has in the past exempted these goods from VAT to make them affordable to millions of low-income consumers, but a copy of the Bill seen by the Business Daily shows that the Treasury has made a complete U-turn on the promise Mr Githae made to the 10th Parliament that it would spare the poor the pain of pricey basic goods and services through continued exemption from the consumption tax.

If passed without amendments, imported medical supplies and equipment, including human vaccines, will be charged VAT at the rate of 16 per cent, instigating a general rise in the price of medicines.

The taxman will make similar demands on ordinary paper and newsprint, setting the pace for a general rise in the cost of exercise books, newspapers, journals and periodicals. Families with young children will also dig deeper into their pockets to buy diapers, urine bags, and mosquito nets, among other sanitary materials if Parliament passes the Bill as proposed by Mr Rotich.

Martin Kisuu, the chief executive of Taxwise Consulting Limited, said the Treasury’s proposals mean that all food items will be taxable except in their raw state.

“Once processed into bread, flour, milk and rice products, they attract VAT,” he said on Friday after studying the VAT Bill 2013.

Mr Kisuu said that electricity bills will also rise as power joins the list of items that qualify to be VAT taxed at the top rate of 16 per cent instead of the current 12 per cent.

The taxman will also levy a 16 per cent VAT on agricultural inputs that are currently zero-rated with the exception of fertiliser, which remains exempted in the latest Bill though tax experts said the exemption will not shield the cost of this key farming input from rising.

“The real impact of this is to make fertilisers more expensive since the suppliers will no longer be able to recover VAT on their overheads and input costs,” said Mr Kisuu.

The Treasury, through the Value Added Tax Bill 2013, is also preparing to raid the aviation industry through imposition of new charges on aircraft landing and parking services.

The Bill, which the National Assembly through the chairman of the Finance, Planning and Trade Committee Benjamin Langat published on June 18, also opens the door for the taxman to rope into the tax bracket persons with diplomatic privileges who have been enjoying tax-free imports.

If the Bill passes unchanged, diplomats and persons who enjoy diplomatic privileges will only benefit from a one-off tax-free importation of goods upon entering Kenya.

The VAT Bill 2013 is also seeking to empower the Kenya Revenue Authority (KRA) to impose taxes on hides and skins and net additional revenue by taxing supplies intended for use in aid-funded projects that were exempted in the VAT Bill 2011. Business or users training and consultants providing services designed to improve work practices and efficiency of an educational organisation, including primary, secondary, technical college or university or institutions established for promotion of adult education, vocational training or technical education, will also be charged the tax if Parliament rubber-stamps the Treasury’s proposals.

Japan seeks to develop Kenya’s geothermal plan

President Kenyatta talks to his deputy William Ruto before leaving the country for Ethiopia May 23, 2013. The Kenya Government has called for the harmonisation of policies and the regulatory framework of the communications sector across the East African region to speed up integration and attract more investment. PHOTO/FILE 

By IMMACULATE KARAMBU

 

In Summary

• This technical assistance will improve GDC’s capacity to prepare economically viable business plans”
  JICA

The Japanese want to play a key role in Kenya’s plan to develop 5,000 megawatts of geothermal electricity. Though the Japan International Cooperation Agency (JICA), Japan is seeking Kenya’s nod to allow it develop the country’s master plan on geothermal development.

Speaking in Nairobi on Friday at the signing of a grant to the Geothermal Development Company (GDC), JICA’s industrial development and public policy director-general Hidetoshi Irigaki said that Japan would also offer technical help to Kenya.

“This technical assistance will improve GDC’s capacity as well as enhance capacity to prepare economically and environmentally viable business plans,” said Mr Irigaki.

The state-owned company will receive Sh1.6 billion ($18 million) from JICA to support its capacity strengthening programme.

Speaking at the same event, Cabinet Secretary for Energy and Petroleum Davis Chirchir said that Kenya is targeting to harness 25 per cent of the local geothermal resource through capacity building partnerships.

Cheapest source of electricity

“The government of Kenya requires more than 20,000 megawatts of electricity by 2030. A quarter of this requirement is expected to come from geothermal resources. To achieve this target, GDC requires continuous capacity building in terms of equipment and human resources to be able to deliver on its mandate,” said Mr Chirchir.

Currently, Kenya has 14 rigs working in different geothermal fields. The country requires 15 rigs and drilling continuously for the next 17 years in order to achieve the set target according to estimates from the Energy ministry.

While geothermal power has been argued as being among the cheapest sources of electricity, the resource is yet to be exploited to its full potential in Kenya.

The Kenya Electricity Generating Company (KenGen) is currently undertaking a project to develop 280MW of geothermal power which is argued to be the single largest project in Africa.

Move to lower calling rates in East Africa Move to lower calling rates in East Africa

President Kenyatta talks to his deputy William Ruto before leaving the country for Ethiopia May 23, 2013. The Kenya Government has called for the harmonisation of policies and the regulatory framework of the communications sector across the East African region to speed up integration and attract more investment. PHOTO/FILE 

By CHARLES WOKABI

 

In Summary

• On Monday, acting permanent secretary in the Ministry of Information Communications and Technology Bruce Madete urged regional stakeholders to find a solution to the high tariffs that East Africans have to pay when calling across borders.

The Kenya Government has called for the harmonisation of policies and the regulatory framework of the communications sector across the East African region to speed up integration and attract more investment.

Addressing the East African Communication Organisation Congress, Deputy President William Ruto challenged sector stakeholders in all member states to ensure there is seamless communication across the region without imposing policy and regulatory barriers.

“There is an undeniable correlation between development of the ICT sector and economic growth. As a region, we need to be able to communicate across borders at reasonable rates whether it is on the same or different networks,” Mr Ruto said.

This, he said, will attract investments into the region given the pivotal role played by communication in commerce.

High roaming and international calling charges have been cited as some of the major barriers to trade in East Africa.

On Monday, acting permanent secretary in the Ministry of Information Communications and Technology Bruce Madete urged regional stakeholders to find a solution to the high tariffs that East Africans have to pay when calling across borders.

“These high roaming charges negate the very essence of integration and act as a disincentive to communication and trade within the region,” Mr Madete said.

For instance, on the Safaricom network it is cheaper to call the United States and India at Sh5 per minute than Uganda or Rwanda at Sh30 per minute.

This situation is replicated in the Telkom Kenya network where calls to the United Kingdom can cost as little as Sh3 per minute while subscribers calling Uganda will be charged at least Sh18 per minute.

Mobile operators have blamed the high inter-regional calling rates and roaming charges on unfair taxation policies adopted by the member states.

“There is need for the governments and regulators in the region to jointly look into possible ways of making this service more affordable to customers,” Safaricom chief executive Bob Collymore told the Nation on Friday.

The EACO brings together private sector players and regulators in the information communications technology sector from all five partner states.

Mr Ruto also called for the implementation of the Universal Access Initiative meant to deepen the reach of technology to rural areas, saying the move would open up new markets for businesses.

The initiative, created through an Act of Parliament in 2009, is funded through a 0.5 per cent levy on earnings of all players in the ICT sector. Its purpose is to support widespread access to ICT services, promote capacity building and innovations in the country.

However, the fund is yet to take off with players divided over the modalities of running it. While all agree that taxing service providers 0.5 per cent of their annual revenues to be administered by a Universal Service Fund is a good idea, questions on how the money will be used and the composition of the council to administer the fund has split them.

Also discussed during the five-day congress was provision of requisite legislation on pay TV providers’ use of free-to-air content for commercial purposes, which has been termed as vague and hindering relationships between players.

State pledges more support for film industry State pledges more support for film industry

PHOTO | BILLY MUTAI Cabinet secretary for Sports and Culture Dr Hassan Wario.  NATION MEDIA GROUP

By CHARLES WOKABI

 

In Summary

• Last year, the government had given a directive that at least 40 per cent of all content airing in television stations in the country be produced locally. But in April, President Uhuru Kenyatta revised the threshold upwards to 60 per cent to create more job opportunities for the Kenyan youth in arts and film industries.

The government has pledged more support to the film industry ahead of the digital migration that is anticipated to trigger a huge demand for local content.

Addressing players in the broadcasting sector during the 4th Annual Broadcast Film and Music Africa Conference held in Nairobi last week, Cabinet Secretary for Sports, Arts and Culture Hassan Wario said the film industry is poised to experience a boom as the country prepares to move from the analogue to digital broadcasting system which requires more content.

By providing more support to the film industry, Dr Wario said the government would go a long way towards achieving its goals of creating employment for the youth.

“The government’s deliberate policy of local content has seen the majority of TV stations incorporate local content in their programme line-ups. The demand for these programmes is ever on the rise especially among the younger generation; this not only creates employment opportunities for these young guys but it provides a platform through which we can share our culture with the rest of the world,” Dr Wario said.

The two-day conference brought together digital media professionals and stakeholders in the entertainment industry from Kenya and beyond to dialogue on ways of pushing the continent’s film and music industry forward.

“The film and performing arts industry in Kenya has grown to become one of the major sectors providing job opportunities to the youth. Unlike yesteryears when Kenyans didn’t appreciate local films, the trend has changed and there is much to expect from this industry,” Dr Wario said.

He said the government is in the process of creating a new law to enforce the presidential directive that requires television broadcasters to increase the airtime dedicated to locally produced programmes from 40 per cent to 60 per cent.

Last year, the government had given a directive that at least 40 per cent of all content airing in television stations in the country be produced locally. But in April, President Uhuru Kenyatta revised the threshold upwards to 60 per cent to create more job opportunities for the Kenyan youth in arts and film industries.

But despite the government’s intervention that is expected to increase the demand for locally produced broadcast content, producers will be grappling a funding crisis as financial institutions shy away from the industry.

Unlike the analogue platform, the digital signal allows for more channels to be broadcast within a single frequency thereby creating a big demand for content.

According to the Kenya Film Commission, many finance institutions shy away from the creative arts industry because returns on investment are not readily clear.

“However, it is envisaged that as demand for local content grows and more feasible productions are realised, financial institutions will find the industry attractive and therefore provide resources,” KFC chief executive officer Peter Mutie told the Sunday Nation.

Among other interventions the government has made in the industry is the proposal to set up a national lottery scheme to fund the creative films and sports.

Kenya was expected to have already shifted to the digital broadcasting platform by January this year, but like most of the East African Community, it missed the deadline.

Tanzania is the only member that met the December 31, 2012, migration deadline; the other four members hve extended it.

Last week, Information Communications and Technology Cabinet Secretary Fred Matiang’i called on the countries in the region to realign their digital migration timelines to avoid lagging behind the global cutover of June 2015.

Push to increase duty on textile imports

_News

Workers at an EPZ textile factory. Textile manufacturers want the government to impose additional import duties on new and second hand clothes to protect the local market from cheaper imports. Photo/File 

By MWANIKI WAHOME

In Summary

• According to a report prepared by Charmy Investments Ltd on the textile industry that outlines the development of the sector and challenges, those in the industry say the duties collected should be used to set up a stabilisation fund to guard the local industry against shocks in the international market.

Textile manufacturers want the government to impose additional import duties on new and second hand clothes to protect the local market from cheaper imports.

The manufacturers are also calling for a policy change to force government institutions to increase their uptake of locally manufactured textile products.

According to the 2013 Economic Survey, cotton production declined to 10,000 tonnes from 22,000 tonnes in 2011, sending the alarm to the manufacturers that the future of the industry was bleak.

The number of those employed in the textile and apparel industries in the Export Processing Zones contracted by 5.4 per cent from 25,169 to 23,811 workers.

Capital investment in the sector declined for the second consecutive year from Sh6.9 billion to Sh6.2 billion.

If the ‘buy Kenyan, build Kenya” concept succeeds, it would see government institutions like security agencies, prison department and learning institutions turn more to locally produced fabric.

Currently about 93 per cent of the fabric used in these institutions is imported.

The textile industry has been identified as a key plank in industrialisation in the Vision 2030 blueprint that stipulates how the country will achieve medium-income status in the next 17 years.

According to a report prepared by Charmy Investments Ltd on the textile industry that outlines the development of the sector and challenges, those in the industry say the duties collected should be used to set up a stabilisation fund to guard the local industry against shocks in the international market.

“The government institutions buy only 7 per cent of local textiles which should be increased to enable the local industries invest more in the sector. If a small duty is levied on imports, this will make money that can go to the stabilisation fund,” said Ms Margaret Chemengich of Charmy Investments Ltd when she presented the report.

The performance of the textile industry nose-dived in the late 1980s following market liberalisation that opened local industry up to competition from mass- producing low-cost countries like China and India.

By buying locally, the players said, the government will inject into the industry about Sh2.55 billion and create 8,275 direct jobs while improving the lives of more than 6,000 cotton farmers in the country.

The report was launched at a forum organised by the African Cotton and Textile Industries Federation to provide a platform for the preparation of the African Growth and Opportunities Act Forum to be held in Addis Ababa next month.

The 12 ginneries currently operating in the country have occasionally complained of lack of raw materials and are forced to import cotton from Uganda and Tanzania.

In total, there are 22 ginneries with a combined capacity of processing 140,000 bales, but most of the capacity is un-utilised since the ginneries rarely process 25,000 bales.

Kenya has not been able to exploit the Agoa initiative fully as manufacturers source their raw materials from the Far East, thereby denying the country backward linkages that would promote local cotton production.

Why counties won’t get cash tomorrow

 

Senate Speaker Ekwee Ethuro. FILE 

By GRIFFINS OMWENGA 

In Summary

• This is also when ministries, government departments and agencies close their books and send their end-year reports to the office of Controller of Budget to establish the absorption rate of funds allocated to them for the previous financial year.

Governors hoping to receive their counties’ full financial allocations Monday are in for a rude shock after the government said the earliest the funds could be disbursed is early August – and then only in tranches.

The Commission for Revenue Allocation released the allocation schedule on June 26 on how the Sh210 billion will be shared among the 47 counties. Nairobi County stands to receive the largest allocation at Sh9.9 billion and Lamu the smallest at Sh1.6 billion.

County governments are expected to make do with the last batch of Sh9.8 billion advanced to them to kick start their functions after the March 4 General Election when the devolved units came into existence.

“The counties received the last batch of monies that were allocated to them in the 2012/13 Budget almost three weeks ago, and that is expected to last them through to the end of July when they will receive part of the Sh210 billion,” said Stephen Wangaji, communications manager in the office of Controller of Budget.

And contrary to expectations, the funds will be disbursed piecemeal in line with the national government practice of allowing the budgets to be scrutinised and compiled, an exercise that is going on at the moment.

“Even if you were to offer services to the national government today when we are moving to another fiscal period, you would probably be paid after a month because that is when the various requisitions are considered and funds sent,” he said.

This is also when ministries, government departments and agencies close their books and send their end-year reports to the office of Controller of Budget to establish the absorption rate of funds allocated to them for the previous financial year.

However, county governments face a bigger problem. The Senate, which is supposed to debate and pass the County Allocation of Revenue Bill that would allow the national governemnt to allocate the funds, has yet to begin the debate, and the deadline is Monday.

The Senate says it is facing a legal dilemma after having moved to the Supreme Court to challenge the National Assembly decision to ignore their input which increased allocation to counties by Sh48 billion when passing the County Allocation of Revenue Act.

Senators fear that debating and passing the Bill could jeopardise their case in the Supreme Court.

Dr Boni Khalwale (Kakamega) said if the Senate goes ahead to pass the Bill that for now proposes dividing the Sh210 billion among the counties, then they wouldn’t be “approaching the Supreme Court with clean hands”.

“There’s the greater issue of sub-judice,” said Dr Khalwale.

The Kakamega senator also questioned the position of the Senate on the Division of Revenue Bill considering that they had proposed Sh258 billion – Sh48 billion more than what appears in the final Bill – but their proposal was ignored by both the National Assembly, and President Kenyatta.

“If we proceed, do we proceed with the Kenya National Assembly version of the Division of Revenue Bill, which was assented to, or do we proceed with the version of the Senate of Sh258 billion?” he asked.

He called on Senate Speaker Ekwee Ethuro to make a ruling on the matter so the Senate is absolved of any blame.

“If we don’t proceed, the immediate procedure is that county governments will be starved of cash, and Kenyans will ask, who do we blame? The Speaker should tell the country that the Senate is not to blame,” he added.

Dr Khalwale said the Senate will not work with the Sh210 billion figure, and even if it is forced to do so to sidestep a crisis in county budgets and county spending, then the Supreme Court will have to be told that money is not the only business; the process counts as well.

He pointed out that if the counties seek more money, but the process of approving the money is contested, then the Senate might be left out.