Working on(or over?) the Railroad–“What is emerging as one of Kenya’s most infamous privatisation scandals” and “the new scramble for Africa”

In the category of: Now They Tell Us—

The Daily Nation is replete with stories and commentary on the Mombasa-Kampala railroad and the various claims and disputes among the parties to the Rift Valley Railroad concession, granted in 2005 for a term of 25 years and reporting about the original “wheeling and dealing” that set up the current failure of the operation.

Today’s installment asserts “Future of Rail Firm to be Decided Wednesday” at a meeting between the Kenyan and Ugandan governments and feuding shareholders.

When Kibera slum dwellers uprooted the railroad tracks during the 2008 post-election violence, it seemed to be taken by some from the West as confirmation of a violent and uncontrollable nature of the Opposition, as well as perhaps by some as consistent with certain ethnic stereotypes–and was said to be be a major international incident due to reduced supplies to Uganda, Rwanda and Burundi. Unfortunately, it would appear that even greater property damage has been done–albeit more genteelly and more discretely, by better dressed people with a lot more money–over a period of years in the privatization. I say nothing in defense of vandalism here, but just simply point out that some forms of property destruction get condemned while others get financed.

How plan to privatize railways became Kenya’s public sector reform nightmare; Desire to save face traunched the reality that Kenya and Uganda were handing over a national asset in a fundamentally flawed deal

The World Bank extended a Sh6 billion loan to pay off the sacked workers. But, despite all these concessions, Mr Puffet turned up with an empty pocket on November 1.

According to experts who have been involved in such deals, it would have been possible to detect that Mr Puffet did not have money right from the start if the due diligence conducted was thorough and if the Treasury had demanded for guarantees that the money is available.

To save the situation, the governments and the International Finance Corporation (IFC), which is owned by the World Bank, hastily amended the contracts by introducing two legal devices that would enable Mr Puffet to raise the money required in 30 days before he could be handed over the railway.

Mr Puffet and his financial adviser from PWC, Mr Vishal Agarwal, started by knocking on the usual doors looking for the cash at firms such as major private equity shops and investment houses, but many could not touch the deal — despite the world then being awash with excess money — because either the window to close the deal was too short, or they were put off by the political risk and the shareholding squabbles that plagued Rift Valley Railways (RVR).

(more…)

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Lots of Links–Kenya

Good news, to follow up on my previous post about Nescafe and Kenya, here is a report from CapitalFM titled "Kenyan Coffee Gets Branded" about a new effort to add and capture value for Kenyan growers by the Kenyan Coffee Board.…

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Premature Reports?

More confusion--BBC News reports that Kenyan authorities reported that "Jamaican Hate Cleric" al-Fairsal had once again been expelled and had departed for Jamaica. Or maybe he hasn't left the country after all. On the US side, I wrote approvingly of…

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