Category Archives: Lamu

Ethiopia – Kenya relations impact roads and coastal developments

This week, Ethiopia’s new Prime Minister, Dr. Abiy Ahmed Ali, visited Kenya on a state visit and with his host, President Uhuru Kenyatta made commitments for regional infrastructure projects of aviation roads, railway, and electricity.

According to the joint communique released by Kenya’s President, some resolutions going forward from their talks include:

  • The two countries will develop Moyale on the border as a city and economic zone.
  •  Kenya will avail land to the Ethiopia government at Kenya’s new port in Lamu that is under construction, and Ethiopia will develop that to facilitate logistics for their country,

  • The two countries will develop the LAPSSET projects including the road from Isiolo, (via Moyale) to Addis Ababa, a railway line from Addis to Nairobi and an electricity transmission line between the two countries. They would also supervise the road between Lamu, to Moyale (via Garissa and Isiolo) and on to Addis (via (Hawassa).
  • Ethiopian Airlines would be granted a second flight frequency to Mombasa,
  • Also, the two countries will have joint military training even as the leaders the lack of  international support to combat Alshabab through AMSIOM which faced inadequate funding and attention. The countries would also cooperate on agriculture, and the exchange of prisoners (edit: this is already happening).

Changes at Lamu are coming, including land acquisition by the government which has been slow and sometimes controversial and recently, a court ruled that the government should compensate Lamu fishermen (4,600 of them) for not consulting them on the port design plans.

Reading the Tea Leaves at Kurwitu Ventures

Kurwitu Ventures published their 2017 accounts last month. The company listed on the

Growth Enterprises Market Segment (GEMS) of the Nairobi Securities Exchange (NSE) back in November 2014 at a premium price of Kshs 1,250 per share. The GEMS segment was created was created to give small and medium enterprises an easier route to the capital markets through lower requirements such as being in operation and audited accounts for just a year and took take steps to improve their governance
Their 2017 report notes that Kurwitu offers Shariah-compliant investments and asset management services – including Sukuk securities (Islamic bonds) – and their key focus remains on agriculture investments. The company may also invest with others persons in pass-through ventures such as REIT’s and investment notes – and such products may not appear on the group balance sheet.
 In their original listing document (PDF), the company had forecast to generate revenue through three sources; from early-stage equity investments (generated by investing Kshs 100M in in projects in 2015, up to Kshs 200M in 2017), doing three (3) pass through investments a year of about Kshs 400 M in value – out of which they would earn a 1.5% fee and finally, corporate financial advisory deals for which they would earn a minimum of Kshs 4 M per deal. But in 2017, the company lost Kshs 10 million (10 M) compared to a loss of Kshs 14 M the year before. They had revenue of Kshs 317 shillings (all interest income, and still an amazingly low amount of interest income in relation to their bank balances) while they had revenue of Kshs 20,885 in 2016.
Directors at the time of listing were Abdikadir Hussein Mohamed, Mohamed Abdirahman Hassan, Sumayya Hassan Athmani, Jamal Isaak Ibrahim, Abdikadir Mohammed Haji, and Abdirahman Abdillahi and shareholders were Abdirahman Abdillahi (51%), Mohammed A. Hassan (27%), Ali Daud Mohamed (4%), Noordin M Haji (4%) and Anas Ibrahim Hussein (4%).  Abdirahman Abdillahi and Mohammed Hassan have since reduced their stakes in Kurwitu. To date, shareholders have lent Kshs 70 million to Kurwitu (including 20M in 2017) and these loans, which have no repayment date or interest charged, can be converted to shares at a value of Kshs 1,400 per share – and the current outstanding loans are equivalent to 50,000 shares against the current 102,000 issues shares. The company is authorized to have 125,000 shares. 

A tractor at Lamu (no relation to Kurwitu)

The company created an asset management subsidiary in March 2015 that is 99.9% owned by Kurwitu Ventures and 0.01% by Abdirahman Abdillahi (the managing director). It has 3 plots of land in Lamu – Magongoni that it bought for 102 million and which it has owned since its listing, while in 2015 they bought another parcel in Lamu – Lake Kenyatta for Kshs 4 million.

In 2017, the company had Kshs 6 million (6M) in the bank, paid 5 M in salaries and another 3M in professional fees. Their accounts were audited by Abdulhamid & company. This accumulated losses at the end of  2017 were Kshs  44 million, compared to Kshs 33 M the previous year.

Other companies on the GEMS segment of the NSE include Home Afrika, Flame Tree, and Nairobi Business Ventures. Cytonn Investments, which was granted a fund manager license last month, also plans to list under GEMS later this year, while Atlas has already exited.

Kenya 2018 Budget Policy and the Big Four

Kenya’s National Treasury has published the 2018 budget policy statement  (BPS) – titled “The Big Four” – creating jobs, transforming lives.

It has lots of mentions of the “Big Four” agenda which President Uhuru Kenyatta unveiled in his Jamhuri Day speech (December 12, 2017) which are targets of what his government will aim to achieve in its second term. According to the BPS, the “Big Four” Plan (items are) increasing the share of manufacturing sector to GDP; ensuring all citizens enjoy food security and improved nutrition by 2022; expanding universal health coverage; and delivering at least five hundred thousand (500,000) affordable housing units.

BPS excerpts; 

  • The BPS assumes that GDP will be between 6% to 7% over the next five years, and nominal GDP will rise from Kshs 6.7 trillion ($66 billion) in 2016  to Kshs 14.3 trillion ($139 billion) in 2022.
  • The BPS assumptions are premised on improved collections and efficiencies at Kenya’s 47 developed counties to collect revenues, and for them to have and adhere to realistic budgets. Also, that there be reductions in duplication of roles, resulting in simpler government structure. Counties wages as a percent of their revenue has been 37-38% for the last three years.
  • The BPS cites a goal to double income tax from Kshs 625 billion in 2016-17 to Kshs 1.26 trillion in 2021-22 and mentions that a review of Kenya’s income tax code will be completed by June 2018 to enhance tax compliance and ensure the stability of tax revenue. 
  • The BPS notes that interest payments over the same period will rise from Kshs 271 billion to Kshs 491 billion and wages from Kshs 336 billion to Kshs 563 billion. Elsewhere it projects that wages which were 30% of gross national resource in 2016/17 will progressively reduce in subsequent years down to 23.4% in 2021/22.
  • The BPS cites public-private partnership projects that will be undertaken during the 2018-2020 period such as a second Nyali bridge, Lamu coal plant, Lamu port (3 berths),  Lamu-Garissa-Isiolo highway, airport rehabilitation car parks, conference centers, affordable housing projects, and even a Likoni crossing aerial cable car.
  • There are also 22 energy projects – a mix of geothermal, solar, wind, from which the government commits to purchase energy. These include Lamu coal ($360 million per year) and the Lake Turkana wind (€ 110 million per year).

Some risks noted in the BPS include, counties failing to collect & remit revenue, and the Kenya Deposit Insurance Corporation only covers 9.2% of bank assets (the figure should be closer to international goal of 20% to protect against systemic bank risks). Others are terrorist attacks, natural disasters, climate change, disruptions to mobile money systems, unfunded pension liabilities, and most important the sustainability of public debt.

Oil Pipeline, Economics & Politics Part II: Lamu-Turkana

Yesterday, State House Kenya sent out a statement about plans for a new Kenya oil pipeline from Lokichar in Turkana to Lamu at the Kenya Coast which Total had now committed to build.

The statement comes at a time when Uganda which is believed to have larger oil fields that Kenya has committed to build an oil pipeline through Tanzania, rather than through Kenya. Also for Kenya which had planned to start oil shipments last year in a pilot project using trucks from Turkana to Mombasa, with Tullow, had that plan temporarily stall over infrastructure and political issues.

Blocks sweeten oil pipeline deal.

The Total offer will be sweetened by the provision of some oil blocks in Kenya. Total is in the processor completing an acquisition of Maersk Oil for $7.45 billion and doing the pipeline for Kenya is one way to get local approval for the deal from the local competition authority. 

Following Total SA’s commitment, the Government has consented to a proposed acquisition of the issued and to-be-issued share capital of Maersk Oil Exploration International (Mogas Kenya) in respect of Blocks 10BA, 10BB and 13T. – State House Kenya statement.
Total Kenya is listed on the Nairobi Securities Exchange and Total has been in Kenyan for over sixty years; the company’s operations include eight depots (five of which are solely owned), 2 LPG filling plants and 180 service stations.
The news comes after other oil developments including Total buying out a majority of Tullow’s oil developments in Uganda, leaving Tullow to concentrate on the oil pipeline through Tanzania.

Also see part I of Oil Pipeline, Economics & Politics.

Kenya’s Money in the Past: Spymaster Memoirs by Bart Kibati

Excerpts from the Memoirs of a Kenyan Spymaster, a unique autobiography by Bart Joseph Kibati who worked in national intelligence for over two decades, where his job was to, with others in the business, identify and analyze threats and advise the government. It is a revealing look at many sectors of his life (he got married the same day that Tom Mboya was shot), Kenya’s transformation in the independence era, the business environment, and the state of security in East Africa and international relations, while serving in two administrations during  which he interacted with Presidents’ Kenyatta and Moi.

Spymaster excerpts

Police & Cattle & Remote areas

  • Cattle rustling by cattle raiders – Ngorokos (former soldier) has long been a feature in Kenya, with Laikipia and Samburu raids spilling over to Turkana, Baringo and Isiolo areas. Suguta Valley where over 40 police were killed in 2012 is a place that police have long avoided going to for years because of the dangers.
  • While the ‘Ngoroko’ plot against Moi, was a myth, it was based a well-intended idea to have an elite fighting unit to chase and deal with bandits.
  • For decades, Lamu’s Boni forest, which is near the Somalia border, has been a hideout for poachers & bandits and this has been sustained by poor policing practices in the area and support by local tribes.

East Africa & Leadership Styles

  • Some keen observations on some of the factors such as economic desires, ideology & actions of leaders  – Kenyatta, Nyerere and Obote/Amin and other political party & government officials in the run-up to why the East Africa community collapsed.
  • Two days after the signing of an East African a treaty in 1963, there were coup attempts in all three EAC countries.
  • To make their decisions, Kenyatta relied on finished intelligence information, while Moi wanted raw information.
  • Moi wanted to know why the Kikuyu hated him and Bart told him about quotas in education and government, and the collapse of their banks (which were rolled into Consolidated Bank) and area infrastructure, to which Moi replied: “How can the government build infrastructure if they ask donors not to release funds?”

Industry & Economy

  • Beach plots allocated by the President and partnership with hoteliers resulted in massive hotel empires at the coast or wealth from selling utility plots – by people around the president.
  • The greed of property developers and corruption of environmental regulators.
  • The government moved to grant duty-free cars to university lecturers in a move to pacify their radical ways.
  • Coffee smuggling from Uganda, through Chepkube, opened the eyes of many people in government, including police, to quick great wealth that could come from corruption.
  • The Numerical Machine Corporation was a success. It just could not shed the ‘Nyayo car’ tag.

Human Resources  & Working in the Government: 

  • When he finished form four at Mangu High School, he had job offers to work at East African Airways, Barclays Bank, the Post Office, Kenyatta University, and also the option to continue his schooling at A levels!
  • The recent repeal of indemnity for security forces (and TJRC) makes it hard to do police work such as combating terror threats and is a demonization of patriots.
  • How colleagues, and politicians scheme to transfer, promote or demote other security staff.
  • There is no pension for older Kenyans who, while experienced, are discarded under the guise that they are preventing youth from getting jobs. It seems the Government hopes they will die soon and stop draining the meagre government pension.
  • There were no successful coups in Kenya due to (long-term spymaster chief) Kanyotu and the Special Branch. The 1982 coup was unnecessary;  It could have been stopped but for a leak and bureaucracy. But Kanyotu was later misled by Pattni into the Goldenberg scam.
  • The more open that national intelligence services become, with things like having a visible head (of tee NIS) and a website, the less effective they have become.
  • Finally, he ends by asking if Kenya is facing more terror attacks, urban crimes, and rural banditry today because the country doesn’t have a functional intelligence collecting unit. Or there’s more reliance on technical intelligence than human intelligence by a demoralized, ethnicized spy unit.

Some revelations in Spymaster are shocking, but many of the stories have been cited elsewhere with different interpretations, and many of the people named have passed on, or circumstances have changed. Also another story elsewhere, quotes Lee Njiru a long time civil servant who says that: (the) Official Secrets Act binds civil servants to keep secrets for 30 years and the period had elapsed and he was now free to share what he knows.

Also read The Birth of an Airline by Owaahh, which narrates from the Spymaster book, about the break-up of East African Airways and the birth of Kenya Airways.