Tag Archives: Rift Valley Railways

East Africa roundup for February: Rwanda, South Sudan, Kenya and Burundi

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A roundup of East Africa democracy news and opinion:

Julian Hattem in World Politics Review explains that “Rwanda’s Opposition is Disappearing Along With Kagame’s Credibility“, keyed off the death of popular gospel singer Kizito Mihigo in custody.

This is a good article and I recommend it (while I have to note my pet peeve that it indulges as so many accounts do in the Kagame mythology that the RPF “marched in from Uganda to end the genocide” rather than noting that they came across the border and began fighting years earlier than their march into Kigale in 1994.)

Is there a day coming where Americans notice the problem even of repression of religious freedom in Rwanda in spite of the lionization of Kagame and his willingness to transact with foreigners on terms not available internally?

In South Sudan, a formal unity government was announced to meet the extended February 22 deadline. Most important details are either unresolved, or to be executed from a dead start, but this was a necessary step for hope for deeper progress, especially for one day when the people are free of their current warlord leaders. Riek Machar upon being re-instated as First Vice President was accordingly released from IGAD “house arrest”.

Update–Here is a report from the International Crisis Group: “A Major Step Toward Ending South Sudan’s Civil War”

Kudos are in order for the diplomatic efforts to step up pressure on both sides, and in particular on Salva Kiir who had the most power and leverage through defacto control of the government. It seems that the State Department under Assistant Secretary Tibor Nagy in particular engaged and showed leadership. The US has a unique diplomatic responsibility and opportunity in South Sudan so it is encouraging to see us step up to the plate.

Not sure what to make of this article in which Kalonzo Musyoka and the reporter posit a leading role for himself as Kenya’s envoy: “Kalonzo: How we brokered Kiir Machar peace pact“:

Former Vice-President Kalonzo Musyoka returned to the country on Sunday from Juba after accomplishing a delicate peace deal that saw South Sudan President Salva Kiir and former rebel leader Riek Machar form a unity government.

The negotiators of the peace agreement heavily relied on Mr Musyoka to achieve the long-delayed process towards ending a six-year civil war that has led to loss of thousands of lives.

It is very much true that (1) Kalonzo was a Kenyan insider under Moi and then Kibaki’s Foreign Minister on though the negotiation of the CPA in 2005; (2) Kenya is inevitably of importance in South Sudanese power struggles because of the role of Nairobi as at least the “back office” and “capitol of capital” for South Sudanese kingpins; (3) Gideon Moi (as reported by The Sentry) and certainly other leading Kenyan figures are major players in financial dealings at issue in South Sudan; (4) the U.S. as the leading international power involved in the nascent building of a South Sudanese nation is closest to Kenya and to Uhuru Kenyatta in particular among the IGAD members and leaders, so Kalonzo in representing Kenya and Uhuru presumably has standing with the US in addition to his own background with the negotiations.

Remember that after his deal with Mwai Kibaki during the 2007 presidential campaign to stay in the race and be appointed Vice President, Kalonzo was trusted enough by Kibaki and his men to represent them in Washington during the Post Election Violence in lobbying against a “unity government” with Raila. At that time in early 2008 Uhuru was also in Kibaki’s initial cabinet Minister of Local Government, as he had been under Moi in 2000-2002, administering Nairobi issues in those pre-devolution days.

Speaking of Nairobi, Uhuru and devolution, the purported “sign over” of governmental powers from Nairobi Governor Sonko, to the Kenyatta Administration, while seemingly suspended from official action by court order and facing impeachment and criminal charges, is the big new story.

According to The Standard, “Human Rights Activist Okiya Omtatah and Lawyer Robbin Murimi filed separate applications at the High Court Nairobi challenging the move.”

Uhuru Park

Close behind is the damning latest round of leaks of secret details of corruption and dereliction in the Kenya Railways/Standard Gauge Railroad saga.

Otherwise, as it has become more clear that the BBI is generating inevitable controversy, Ambassador McCarter has tempered his language of American support to emphasize a robust debate with wananchi involvement on “which provisions to enact”. At the same time, three months now since the release of the original BBI Report and almost two years after the Handshake, it remains unclear (or undisclosed) exactly what the “deal” is.

Meanwhile, elections are coming up fast in Burundi on May 20. For the latest on the ongoing pre-election violence, see The New Humanitarian: “Killings, arrests as elections draw near in Burundi.“

The EAC will send Observers since Burundi is a member:

EAC Secretary General Ambassador Liberat Mfumukeko informed the UN delegation that the EAC observes elections within the context of the National Constitutions of the Partner States.

He assured the delegation that preparations were underway for the launch of a longterm EAC Observer Mission that will monitor the Burundi electoral process in its entirety, as well as a short-term EAC Observer Mission that will monitor the polling only.

“I am confident that the peaceful spirit we have experienced during the party nominations will continue during and after elections,” said the secretary general.

“The EAC is calling on all the people of Burundi to sidestep violence, regardless of the situation,” he added. In 2018, Burundi promulgated a new Constitution.

Grand railroad corruption: Kenya’s Daily Nation drops expose of grossly inflated pricing and alarming details from “secret” SGR contracts

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A vital “must read” from the Daily Nation confirms that in spite of Kenyan president Uhuru Kenyatta’s promise to release the contracts for the truncated Standard Gauge Railroad project, the Government of Kenya has been withholding the documents concerned about meeting public records obligations. It is said that Kenya signed the undertakings with Chinese state-owned corporations rather than the Chinese State as such, and that the documents include secrecy provisions that the lawyers are interpreting to conflict with Kenyan law as to the Governments obligations to its own citizens for public contracting.

The story details item after item of hugely inflated prices for components such as generators, supplies, machinery and equipment:

This explains how Kenya ended up paying two times more for a diesel train than what Tanzania negotiated for an electric train. A comparison of the costs shows that Tanzania is building an electric rail at half the price of Kenya’s diesel SGR line.

TANZANIA’S FASTER

At $1.92 billion, which translates to about Sh192 billion at current exchange rates, for the 422 kilometres, Tanzania’s line is not just cheaper; being electric, it’s designed to support a maximum speed of 160km/hour for passenger trains and 120km/hour for freight.

This pales in comparison to Kenya’s line, whose passenger trains have a maximum speed of 120km/hour with freight hauliers doing 80km/hour at best.

Kenya opted for diesel-powered engine that can be upgraded into electric in future.

It is the results of this greed and negligence that taxpayers are now paying for.

OPERATION COSTS

Currently, the revenues generated from the passenger and cargo services on the track cannot meet the operation costs, estimated at Sh1.5 billion a month against average sales of only Sh841 million.

Meanwhile, Kenyans transporters who have allegedly been hurt by Kenyan restrictions intended to forcibly subsidize the non-competitive costs of the Chinese-operated SGR, are seeking the contracts in court. Likewise, the civil society coalition Okoa Mombasa has filed a formal records request as a precursor to a suit if the documents continue to be withheld.

Readers may remember previous reporting of a leaked Auditor General documents indicating that Chinese firms may have been given a security interest in Kenya Port Authority assets and property to secure the loans for these inflated costs. From Maritime Executive in December 2018:

Kenya runs the risk of losing control of the Port of Mombasa if it should default on loans from state financial institution China Exim Bank, according to a new report from Kenya’s auditor general. The terms of a $2.3 billion loan for Kenya Railways Corporation (KRC) specify that the port’s assets are collateral, and they are not protected by Kenya’s sovereign immunity due to a waiver in the contract. 

KRC accepted the multi-billion-dollar loan in order to build the Mombasa-Nairobi standard gauge railway (SGR), with construction services provided by China Roads and Bridges Corporation (CRBC), a division of state-owned conglomerate China Communications Construction Company (CCCC).

“The payment arrangement agreement substantively means that the Authority’s revenue would be used to pay the Government of Kenya’s debt to China Exim bank if the minimum volumes required for [rail] consignment are not met,” auditor F.T. Kimani wrote. “The China Exim bank would become a principle over KPA if KRC defaults in its obligations.”

In addition, any dispute with China Exim Bank would be handled through an arbitration process in China, not in Kenyan courts. The auditor general expressed concern that the port authority had not disclosed these arrangements in its financial statements. 

The Auditor General’s term expired before publication of a final report and has been left vacant, conveniently for freedom of action and ability to avoid disclosure by Kenya’s political officials.

The more information that comes to light the more it would appear that the uneconomical nature of the “white elephant” megaproject was baked in from early stages and does not look to be readily resolvable without exterior finance, renegotiation, write down or other intervention.

Meanwhile, The Star covers a report by the Tax Justice Network that Kenya’s financial sector is well designed to hide corruption as the second most secretive in Africa:

Kenya’s financial sector is the among most secretive globally, according to a new report  by Tax Justice Network.

The sector has been ranked the second most rigid in Africa after Algeria and among the top 30 in the world in the latest Financial Secrecy Index of 2020.

The annual index by Tax Justice Network (TJN) has scored Kenya’s secrecy rate at 76 per cent, meaning the country is a fertile market to stash ill-gotten private financial wealth and other illicit financial flows (IFFs).

Kenya: Security, Corruption, Terror and Elections (and Railroads)

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Nairobi Station - Rift Valley Railways

Nairobi Station – Rift Valley Railways

“On Security, Corruption and Terror Attacks” from the Mzalendo blog:

The link between corruption and the country’s susceptibility to is also recognised in the Parliamentary Report on the Inquiry into the Westgate and other attacks in Mandera in North Eastern and Kilifi in the Coastal Region. The report mentions systemic corruption and the link to terror attack stating:

“Corruption has greatly led to the vulnerability of the country in many cases including where immigration officials are compromised thus permitting ‘aliens’ who could be terrorists to enter the country and acquire identification. This enables terrorists ease of movement and are therefore able to plan and execute attacks without the fear of discovery. Further compromising of security officials enables ‘suspected individuals’ to fail to pursue suspected terrorists and enable them to secure early release when caught or reported in suspicious criminal activities.”

Of the link between Kenyan troops in Somalia and the increase in terror attacks in the country the report states, “It should also be interrogated why other countries such as Ethiopia and Burundi who had earlier sent troops to Somalia have not been attacked by the al-shaabab. Tanzania has also not suffered any terrorist attacks after the 1998 bombings. Is it because our security forces are weak, in-disciplined and easily corruptible?”

The report makes further note of nationwide systemic failure on the part of the Immigration Services Department, Department of Refugee Affairs; and Registration of Persons Department, also “rampant corruption by security officers and other government agents,” and  further that, “police officers are corrupt and lax too. They work in cahoots with alShabaab and are paid to pass information to the latter.”

Last week National Assembly rejected the Joint Committees report and the recommendations made therein. However questions and issues in the report raised with regards to the link between corruption and terrorism still remain.

AfriCOG report: Election Day 2013 and its Aftermath:

In commemoration of this historic election, the Africa Centre for Open Governance (AfriCOG) presents its own findings related to election day and its aftermath in this report. In line with its commitment to promote permanent vigilance by citizens over public life and public institutions, AfriCOG provides an account of voters’experiences at the polling station. In addition, the report details the counting, tallying and results transmission procedures, noting the varied problems associated with these procedures. Overall, in contrast to many observer reports, AfriCOG finds that the failure of electoral technology made it impossible to verify the manual counts of election results. This was compounded by a wide array of problems at the polling station, ranging from names missing from the voters’ register to voter bribery.

To conclude, AfriCOG recommends a series of reforms to ensure that future elections live up to constitutional standards for transparency and verifiability.

And “TransCentury sells Rift Valley Railways stake to Citadel”.  The RVR saga continues, alongside the SGR saga.

More economic news from Kenya while the campaign season continues to heat up

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And in the key sector of immediate interest to the expat community, “Java House deal wins African investment award” from the Nation:

A multi-million dollar deal that saw Nairobi Java House sell a majority stake to a US private equity fund has won the Africa Investor of the year award in a ceremony that also honoured two Kenyan bank chief executives.

The transaction amount was not made public, but Mr Bryce Fort, the managing director of the equity fund, ECP, said at the time that it fell within the firm’s average deal size of about Sh5.1 billion ($60 million).

“The ECP is a strong believer in Africa’s growing middle class,” said chief executive Hurley Doddy in a video address to the Africa Investor summit after winning the award.

The Java House deal, which saw the Washington DC-based ECP acquire a majority stake in the Kenyan coffee chain, was made public early this year.

Here is the link to the story at Africa Assets.

Meanwhile, the IMF predicted 5.7% GDP growth overall for Sub-Saharan Africa in 2013 after 5% growth for 2012.

The Star reports that one group of analysts project that Kenya could near this average, reaching 5.3% growth in 2013 “but only if there is a smooth political transition with a clear winner in round one.”   The pre-election uncertainty and distraction of the campaign are weighing on the economy at present.

Upsidedown Freightcar

A key example of the progress and the frustrations in the Kenyan, and regional, economy, is found an op/ed column in the Sunday Standard from Polycarp Igathe, Chairman of the Kenya Association of Manufacturers, headlined “Inefficient railway system hurting national growth”:

Last month, I visited the port of Mombasa in the company of board members of Kenya Association of Manufacturers (KAM) and Kenya Shippers Council (KSC).

We witnessed firsthand, that at long last, chronic port congestion and inefficiencies are being tackled, bravely, by Kenya Ports (KPA), but timidly by Rift Valley Railways (RVR).

Gichiri Ndua, KPA’s Managing Director explained the gains, efforts and challenges at Kilindini port. Ship-to-shore gantry capacity has more than doubled, dredging of the port is complete and the new berth 19 is almost finalised allowing Port of Mombasa to handle a 16 per cent growth in cargo throughput. Some of the largest shipping lines are now able to call and enables Kilindini to become a transshipment port.

We confirmed that delays in cargo offtake and high cost of cargo transportation are the result of dismal failure in improving railway infrastructure in tandem with port infrastructure. Citadel Capital and Transcentury the major shareholders in RVR must simply know that they are failing the country in outstanding fashion.

Igathe goes on to write that the railroad bottleneck is a key impediment to regional growth, with Mombasa “the only port known in the world to rely 95 per cent on road freight”.  He hails reports of a new commercial contract between the Kenya Railway Corporation and China Roads and Bridges to start building a standard gauge rail line from Mombasa to Malaba as a “game changer”.  Read the whole piece for a Kenyan manufacturers perspective of what is needed for long term growth.

Related articles

Meanwhile, aside from the famine, business is moving . . .

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Upsidedown Freightcar

The latest on financing for the latest iteration of the Rift Valley Railroad, from “African Capital Markets News”:  a mix of public and well-connected private entities will have various debt and equity investments going forward:

The International Finance Corporation (www.ifc.org) and 6 leading international finance institutions provided $164 million in financing to Rift Valley Railways International (www.riftvalleyrailways.com) to rehabilitate the Kenya-Uganda railway today (2 August). The aim is to boost cross-border trade and investment in East Africa. Other key shareholders are Kenya’s TransCentury, which listed on the Nairobi Stock Exchange on 14 July, and Uganda’s Bomi Holdings Ltd, reportedly owned by Charles Mbire. The financing is part of a $287m capital expenditure programme to improve the operating company’s infrastructure and rolling stock.
Other institutions participating in the package include: African Development Bank ($40m), Germany’s KfW Bankengruppe ($32m), Dutch Development Bank FMO ($20m), Kenya’s Equity Bank ($20m), Cordiant’s Infrastructure Crisis Fund ($20m) and the Belgian Investment Company for Developing Countries ($10m). The balance of the funding for the $287 million capital expenditure programme is being contributed by shareholders and generated through operations.
IFC is the largest financier to Rift Valley Railways and provides a $32m loan, of which $10m is already disbursed, and an additional $10m in equity to be committed. RVRI is a portfolio company of Citadel Capital, an Egypt-based private equity firm with $8.7 billion in investments across 14 countries in Africa.

We can certainly hope that this combination of interests and expertise will get the job done this time.

Meanwhile, Time features a story on “The Repatriate Generation” about African business executives leaving the North to return to Africa:

Such bonanzas — opportunities in troubled places with huge needs — are increasingly being sought out by a fast-growing group: Africans who have returned home after years of living, working and studying in the West. Though still a small subculture, African executives who have abandoned high-flying careers on Wall Street, in the City of London and in other financial hubs are becoming a force across the continent, their impact far outstripping their numbers. By moving home, they and others are bucking the trend of generations of Africans who headed west in search of brighter prospects, better education and decent jobs — and stayed abroad for good. Millions of African families have been kept afloat for decades by remittances from relatives working abroad as everything from street cleaners to physicians. Now with economic prospects and, in some cases, political stability improving in Africa while both are declining in the West, some of those relatives have concluded they are better off back home. “There is a momentum among young, upwardly mobile people to come home,” says Rolake Akinola, a Nigerian business analyst with years of work experience in London. “We call ourselves the Repatriate Generation.”

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

Today’s Corruption News–Education Funds, Rift Valley Railways, Maize and More

The latest on the Rift Valley Railways saga–how business is done in Kenya

The latest in the Rift Valley Railroad saga–how business is done in Kenya

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New status in Rift Valley Railroad saga: Transcentury connections win the day.

Jaindi Kisero in The East African

“High-profile Kenyan investment house, Transcentury Ltd has earned a guaranteed position of chair of the board of the newly restructured Rift Valley Railways Investments, under a new deal struck with wealthy Egyptian private equity firm, the Citadel Group.

Rift Valley Railways runs the 1,200-kilometre metre gauge between Mombasa and Kampala under a 25 – year concession. The arrangement is spelt out in a new shareholders agreement with Citadel, which has been seen by The EastAfrican.

Hammered after months of lengthy negotiations, the agreement is largely viewed by insiders as representing a tactical retreat by the wealthy Egyptian equity fund to accommodate the interests of the politically- influential local shareholders of TransCentury.”

Today’s Corruption News–Education Funds, Rift Valley Railroad, Maize & More

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Kenya’s papers today feature lots of corruption stories.  The press should be congratulated for doing a better job of sticking with some of these issues, in some part I think due to the renewed energy and courage shown by civil society.  A certain level of moral support from the donor/diplomatic community probably helps as well.

The KACC has recommended charges against eight officials for a portion of the missing Free Primary Education funds headlines the Daily Nation. The downside of course is the KACC can only recommend–action is in the hands of Attorney General Wako, famously subject to a visa denial for travel to the US due to his record of de facto support for impunity, as announced in last fall’s “tweet” from the US Ambassador.

And speaking of the Attorney General and the Rift Valley Railroad concession scandal, the Daily Nation also reports that Wako, Head of Civil Service Francis Muthaura, Transport PS Cyrus Njiru and Finance PS Joseph Kinyua have been called to appear before Parliament’s Public Investment Committee to answer as to why they disregarded the Committee’s advise that the concession be terminated.  Again, it is positive to see the Parliamentary committee, like the KACC above, push forward in its advisory capacity–but frustrating to have to wonder whether impunity will nonetheless prevail.

And more on the outstanding maize scandal that we have written of previously from the Standard, with more here. PriceWaterhouseCoopers, after being hired at the instance of PM’s office, has issued a report said to recommend that the KACC re-open its investigation, and in particular look at high officials including the PSs in both the PM’s office and in William Ruto’s Ministry of Agriculture. The Daily Nation covers the PwC report here.

The coverage of the report on the maize scandal is a good example of why you have to read both major Kenyan daily papers–as well as the Star if you are in Kenya since it isn’t fully on-line yet.  The Nation may have a degree of journalistic polish that the Standard sometimes lacks (and perhaps less stories that are specifically messed up), but the Standard has a bit more “guts” in some cases–in this case naming the names of the officials in the PwC report rather than, for example “two permanent secretaries”.

Following up on another outstanding matter, the games going on to control the Kenya Airport Authority, the Standard reports that the President’s associate George Muhoho is finally retiring, next month, at the end of the irregular extension of his term granted him by fiat of the Minister of Transportation Ali Cherau Makwere, who’s election has now been voided.