Six years after British firm Tullow Oil announced that it had struck oil in Kenya, four tankers, each carrying 156 barrels arrived in Mombasa on Thursday. It is East Africa’s first commercial oil. The tankers arrived four days after President Uhuru Kenyatta flagged them off from the Lokichar oilfields in Turkana County, 1,025 km from Mombasa. The trucks were received by Petroleum and Mining chief administrative secretary John Mosonik and other government officials at the Kenya Petroleum Refinery Ltd plant in Changamwe. Transportation of the early oil by road will cost $15 million. It takes each truck 10 days to complete a round trip. At least 2,000 barrels of crude are expected to be transported every day from the Lokichar oilfields to the refinery, where they will be stored. The Petroleum and Mining Ministry says export will begin once 400,000 barrels arrive at the facility. Commercial production After the launch of the Early Oil Pilot Scheme (EOPS), Kenya now says it will increase investment in the sector in readiness for commercial production, expected to begin around 2021/22. “My government will focus on the development of our oil and gas sectors for the betterment of the economy and people,” said President Kenyatta as he flagged off the trucks on June 3. Tullow Oil, which runs the wells, says it is producing about 500 barrels  per day from the five  wells in the mini-production stage, but the capacity will rise to 100,000 barrels per day in the full-field development stage. The anticipated...

Rwandan Senate has given government up to six months to come up with a clear action plan and follow up on how to put to productivity port land the country acquired in Djibouti, Kenya and Tanzania. This task will see three ministries and the Rwanda Development Board (RDB) convene to draft a plan on how Rwanda can profitably use 83.3 hectares of land. “We have resolved that in not more than six months we get a progress report on the agreement on Djibouti port and six months for government to give clear plan of how they will put the land  in Kenya and Tanzania to good use,” said Apollinaire Mushinzimana, member of Senate Committee for Foreign Affairs, Cooperation and Security. The resolution comes years after Rwanda has not been able to put to good use strategic land located on the Djibouti free-zone, Mombasa and Isaka Ports donated by the three countries. For example a commission report presented on Monday in the Senate showed that in 1986 Kenya gave Rwanda 12.8 hectares on Mombasa port, in 1987 it received 10.5 hecares on Isaka dry port from Tanzania, and a two phase 60 heactres on Djibouti port in 2013 (20ha) and 2016 (40ha) when president Paul Kagame visited the country. The commission chairman, Michel Rugema blamed ministries of trade and industry, foreign affairs, infrastructure and Rwanda Development Board for not doing anything practical on the land. “These ministries and the development agency have not had a detailed plan, that is why it is...

Preferential Trade agreement, free trade areas, customs union, once well planned under the African Continental Free Trade Area (AFCFTA pact), benefits outweigh protectionism by far. AFCFTA member countries will have few or no price controls in form of tariffs or quotas between each other. This agreement like many around the globe, allow member countries to focus on their competitive advantages and to produce the goods and services they are comparatively more efficient at making, thus increasing the efficiency and profitability of each country. Competitive advantage Competitive advantages are conditions that allow a company or country to produce a good or service of equal value at a lower price or in a more desirable fashion. Business players will need to vigorously monitor their position to compete.  A local company must look for conditions that allow production of goods and services that will generate more sales or superior margins compared to its market rivals. Competitive advantages are attributed to a variety of factors including cost structure, branding, and the quality of product offering, the distribution network, intellectual property and customer service. The two major competitive advantages are comparative advantages and differential advantages. Under comparative advantages, firms produce a good or service more efficiently than its competitors, which leads to greater profit margins, thus creates a comparative advantage. Therefore, the more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantages. Remember rational consumers will chose the cheaper of any two perfect substitutes offered. Investors’ expectations More dynamic...

Kenya’s foreign direct investment (FDI) inflow recorded a spectacular rebound to hit an impressive Sh68.9 billion ($0.67bn) in 2017. However, the growth did not give it compelling volumes, and it emerged that it was trailing other key eastern Africa economies, a new global report shows. The World Investment 2018 report by the United Nations Conference on Trade and Development (UNCTAD) ranks Kenya the fourth highest FDI recipient in East Africa after Ethiopia, Tanzania and Uganda. Ethiopia, one of Africa’s fastest growing economies, absorbed nearly half of the $7.6 billion (Sh760 billion) FDI in East Africa, attracting a total of $3.6 billion (Sh360 billion) such investments. Tanzania and Uganda received $1.2 billion (Sh120 billion) and $0.7 billion (Sh70 billion) respectively. In spite of trailing other East Africa’s key economies, Kenya saw FDI inflow increase from $0.39 billion (Sh39 billion) in 2016 to $0.67 billion in 2017, defying a trend both globally and in Africa where inflows dipped due to a decrease in commodity earnings and value of cross-border mergers and acquisitions (M&As). Kenya’s FDI in-flow performance is attributed to buoyant domestic demand and inflows into the country’s ICT industries, the report said. Last year, in bid to attract and retain investors, the Kenya provided a host of incentives for industries to operate. This included exemption on dividends payable to non-residents by enterprises operating in special economic zones (SEZs), a reduction of withholding tax on interest payable to non-residents by SEZ enterprises from 15 per cent to five per cent; allowing a...

President Uhuru Kenyatta has called on the G7 nations to support the protection of oceans and seas by partnering with Kenya in hosting the first ever high-level conference on the Blue Economy in November. The President persuaded the G7 leaders to embrace the protection of oceans and seas as a shared responsibility. “Your political will and decisive action are vital to driving this agenda. Global partnerships on a win-win basis are necessary in tackling the capacity gaps the most afflicted countries face,” the President said. He spoke on Saturday when he addressed the outreach session of the G7 Summit in Quebec under the theme "Healthy, Productive and Resilient Oceans and Seas, Coasts and Communities". President Kenyatta pointed out that Kenya’s marine logistics and fisheries sector could add billions of dollars to the national economy if its potential was fully harnessed. Unfortunately, President Kenyatta said, successful exploitation of Kenya’s blue economy is hampered by several threats, key among them being plastic litter and Illegal, Unreported and Unregulated (IUU) fishing. To address the threat posed by plastic bags, President Kenyatta informed the summit that his administration banned the manufacture, sale or use of plastic carrier bags. With Rwanda and Kenya already implementing the East African Community Bill banning plastics, the Kenyan Head of State said it was time for a comprehensive global approach to rethinking plastic chemistry and design, recycling strategies and consumer use. "The G7 should recognize and speak with a strong voice against the vice of plastics and its adverse...

Kenya risks missing out on business opportunities in other East African Community (EAC) countries. EAC Cabinet Secretary Peter Munya cited police roadblocks on international highways, double taxation and inefficacy at the port of Mombasa as some of the challenges Kenya must address to maximize on trade opportunities. Munya said he has written to the national Government and asked that roadblocks that have been erected on international highways be removed to ease movement of transit goods. “These roadblocks are causing unnecessary delays of goods from Mombasa to neighbouring countries. I have raised the issue with relevant agency and I hope the barriers will be removed soon,” he said in Kitale. He also asked counties to stop imposing illegal taxes on transit goods. Source: Standard Digital

The Kenyan government has announced that it wants to start exporting oil from the Turkana oil fields sooner than expected. The nation’s Petroleum Chief Administrative Secretary, John Mosonik, confirmed that Kenya will look for buyers of the oil when 200,000 barrels are stockpiled at Mombasa Port. The government had previously planned to export the crude oil once 400,000 had been transported to the coastal town. With the quantity having been lowered, the date for shipments has been brought forward – exports were originally expected to commence in the first quarter of 2019. There will be around 110 trucks carrying 2,000 barrels of the petroleum from the Turkana fields to Mombasa per day, with the trip expected to take around 10 days. “Some of the completed works in this depot is the modification and insulation of the receipt tank with a capacity to hold 90,000 barrels, two adjacent truck unloading bays, a steam boiler for line heating and re-heating the crude oil trucks if necessary,” stated Charles Nguyai, CEO of the Kenya Petroleum Refineries Ltd (KPRL). Source: Business Chief

Taxation by county governments on transit goods is holding back plans to eliminate trade barriers between East Africa Africa Community countries, Cabinet minster Peter Munya said at the weekend. The Cabinet Secretary for East African and Northern Corridor Development said double taxation will stiffle the growth of the East African economic market. “I want to ask the county governments to stop double taxation on the trucks that are on transit, that is not in the constitution,” he said. Munya was speaking in Kitale during a sensitisation workshop for Members of County Assembly drawn from Trans Nzoia, West Pokot, Busia and Turkana whch are border counties on EAC trade rules. He urged counties to minimise roadblocks that hinder movement of goods from the port of Mombasa to other East African countries saying that summit decisions stipulates that unnecessary roadblocks should be avoided on international highways. “It is very clear that there should be no roadblocks on international highways that’s a decision by the summit that must be adhered to, this is causing a lot of delays,” he said. The minister said only gazetted roadblocks placed to enhance security should be in place. He said that as a result of the roadblocks which lead to time wastage, other countries with similar goods are edging out Kenya from its traditional regional markets an advantage that Kenya has been enjoying with the signing of the East African free trade. He said that faster movement of goods from the Mombasa port will enable Kenya to...

Border counties should establish formal trade relations with their neighbours, a Cabinet secretary has said. East Africa Community and Northern Corridor Development CS Peter Munya urged such counties to avoid imposing unnecessary taxes that could hinder cross-border trade. To promote such trade, Mr Munya (pictured) urged the leaders of the affected counties to embrace regular integration and exchange programmes. “In order to create more business opportunities for our people living near international borders, we need to build sustainable business ties with our neighbours. The counties should not put barriers that will hinder trade,” he said. Munya was speaking during a two-day workshop in Kitale over the weekend. The event was organised to educate county executives and MCAs from border counties on EAC regional integration. Participants were drawn from Turkana, West Pokot, Trans Nzoia, Busia and Bungoma counties. Munya said the Government was committed to opening up cross-border business opportunities for Kenyans. Source: Standard Digital

East African countries are struggling to comply with key macroeconomic targets on fiscal deficit, inflation, public debt and foreign exchange reserves ahead of the operationalisation of a single currency regime by 2024. The mixed performance of regional economies on these targets is likely to delay the delivery of the benefits of a monetary union to regional traders and citizens such as reduced costs of cross-border transactions. A study by the United Nations Economic Commission for Africa (Uneca) conducted in October 2017 shows that while the partner states are on track to achieving the criteria on inflation, challenges remain in attaining the targets on fiscal deficit and adequate level of foreign exchange reserves. This, according to the study, is due to the countries' heavy spending on infrastructure projects and increased imports of capital goods. Countries are expected to attain headline inflation of a maximum eight per cent, a fiscal deficit (including grants) of not more than three per cent of GDP, a public debt-to-GDP ratio of 50 per cent and forex reserves of at least 4.5 months of import cover, to qualify to join the East African Monetary Union. Countries are also required to comply with the criteria for at least three years before the official launch of the single currency regime. This implies the countries have up to 2021 to comply with these conditions. However, efforts towards fulfilling these conditions have been lacklustre with signs that some countries could be forced to scale down on huge infrastructure projects to reduce...