The Kenya Pipeline Company (KPC) is kick-starting preparations for the construction of a 540-kilometre pipeline between Lamu and Isiolo. KPC says it will start undertaking a study on the pipeline just as it completes the new Mombasa-Nairobi line The pipeline will be among the largest projects for the State-run company alongside the just-completed Sh48 billion Line 5, between Mombasa and Nairobi, which was plagued by delays and escalation of costs during its construction. The refined petroleum products pipeline will be part of the Lamu Port South Sudan Ethiopia Transport (Lapsset) corridor - later to be extended to other parts of the country as well as beyond Kenyan borders, to Ethiopia. Other projects on the corridor include a highway, railway and crude oil pipeline that will be used in moving oil from Lokichar to Lamu for export The Lamu Road Consortium (led by South African firms, Group Five Proprietary and the Development Bank of Southern Africa) has already been given the go-ahead to construct a 530-kilometre Lamu-Garissa-Isiolo road under a Public-Private Partnership (PPP) programme. The first berths of the Lamu port are also under construction. KPC said it would start doing a feasibility study for the pipeline between Lamu and Isiolo by end of this year. Petroleum and Mining Cabinet Secretary John Munyes said the pipeline would be a ‘game changer’, opening up parts of the country that have for long been neglected and are devoid of infrastructure. “We now need to undertake a study on a new pipeline from Lamu...

Kenya’s trade deficit nearly hit Sh500 billion in the first five months of the year, official statistics show, signalling pressure on the shilling and slowing down growth in new jobs. The deficit – the gap between imports and exports – widened by 8.66 per cent to Sh494.26 billion between January and May from Sh454.86 billion in similar period in 2017, data released last week by the Kenya National Bureau of Statistics (KNBS) indicate. Imports increased by nearly Sh58.12 billion, or 8.26 per cent, to Sh761.28 billion, while exports rose by 7.53 per cent to Sh267.02 billion. A persistently higher demand for imports than exports may mean Kenyan jobs are being lost to factories in major source markets such as China and India which together shipped in goods worth Sh249.57 billion in the five-month period. “There’s an impact on jobs because some of the imports coming from the Far East such as India and China are textiles products which are quite cheaper and that’s hurting the local market,” Genghis Capital senior research analyst Churchill Ogutu said on phone. “Time and again, the government has been trying to revamp that sector (textiles), but with the cheaper imports (it has not been successful) and something has to be done to arrest that trend.” The shilling has nonetheless been relatively stable, averaging 100.67 units to the dollar in May from 102.92 in January, thanks to strong forex reserves. Source Business Daily

The opening of the bigger Mombasa-Nairobi petroleum pipeline has now paved the way for laying of more feeder pipes to interior towns across the country in what is expected to take long distance trucks off the roads. The Kenya Pipeline Company (KPC) on Wednesday switched on the 20-inch pipe that will run parallel to the ageing 14-inch line that had suffered partial blockages, restricting fuel flow and causing supply delays. The new line will now enable speedy evacuation of fuel from Mombasa port and cut waiting time and costs. “The line will eliminate hundreds of trucks daily, safeguarding against road degradation and environmental pollution arising from continued trucking of products,” said KPC Managing Director Joe Sang. Construction of the new pipeline was dogged by years of delays and cost overruns that are currently under investigation by various State agencies. Mr Sang expects the larger line to slash demurrage charges payable to shipping lines whenever imported fuel is not discharged on time, costs that are passed on to consumers. The pipeline company last year conducted feasibility studies on the plan to devolve the pipeline network to counties.

NAIROBI, KENYA: Regional experts investigating manufacturers on suspicion that they imported industrial sugar have cleared Kenyan companies of wrongdoing. The Ugandan and Tanzanian experts who were in the country from June 25 to June 28 say that only table sugar in excess of Sh31 billion was imported under the duty-free window. “There was a surplus of 312,469 tonnes of sugar for direct home use in Kenya. Sugar for industrial use was not imported under the gazette notice,” said the letter signed by EAC Director General Customs and Trade, Kenneth Bagamuhunda. Suspicion Kenyan products including cakes, sweets, ice cream and even juices had been slapped with a 25 per cent duty on suspicion that sugar imported under the duty-free window was being used by manufacturers. It did not help that Rai Group of Companies Chairman Jaswant Rai, while appearing before a Parliamentary committee, accused some local firms of selling industrial sugar to consumers. “I, for sure, know…forget one bag….not one kilo went to factory for processing,” claimed Mr Rai, who has been at the centre of the storm. The experts have also called on Tanzania to give preference to Kenyan lubricants sold by Oil Libya, Total and Shell Vivo. Kenyan firms were also angered by the lack of preferential treatment on textiles, edible oil, cement and lubricants. For those products, only firms that use locally-sourced raw materials are allowed preferential treatment. The experts said brands such as Elianto from Bidco, Risnun and Captain Cook from Kapa Oil met the criteria of...

Regional economies have allocated a third of their individual budgets in the new financial year to infrastructure projects, aiming to boost economic activity and spur growth. Of the $15.8 billion going to development projects, Kenya allocated $6.25 billion (39.5 per cent), followed by Tanzania at $5.3 billion, then Uganda at $3.05 billion and Rwanda at $1.28 billion. Kenya reduced its allocation from $7.4 billion in the 2017/18 fiscal year. Tanzania’s allocation increased from $5.27 billion in the year ending June 30. Uganda had set aside $1.32 billion, while Rwanda had earmarked $924 million for development expenditure last year. The projects range from airport upgrades to aircraft purchases, modernisation of road and railway networks, and energy generation. Tanzania says it will prioritise the construction of its Central Railway Line under the standard gauge railway project, for which it has budgeted $3.14 billion, with about half of it paid to the contractor. Kenya has allocated $747 million in the new financial year for the construction of Phase 2A of its SGR, from Nairobi to Naivasha in the Central Rift. Uganda is juggling between upgrading its metre gauge railway and initial work on its SGR, which is currently at the land compensation stage. Uganda Railways Corporation took over the operation of the metre gauge railway, after the termination of the Rift Valley Railways concession. Railway services on the Eastern Route resumed in February, and they reinstated the passenger rail service in the Kampala Metropolitan Area. Ugandan Finance Minister Matia Kasaija reiterated the country’s...

The plan to connect the region through a railway network is inching towards reality, after Kenyan and Ugandan presidents met with Chinese officials this week, with reports that the two countries are likely to finalise a financing deal for the Kisumu-Malaba-Kampala stretch of the standard gauge railway soon. Uganda has said that it will sign its final financing agreement for its SGR in September, to pave the way for the construction, which has been delayed for more than two years. Kenya, which depends on Kampala to secure joint funding for the Kisumu-Malaba stretch, has already started laying the tracks for the $1.5 billion second phase of the line between Nairobi and Naivasha. This week, a Chinese delegation led by vice-premier Wang Yang and China Exim Bank chairperson Li Ruogo met with Presidents Uhuru Kenyatta and Yoweri Museveni. The agenda was to update the Chinese officials on the progress of the SGR projects in Kenya, and hold discussions on Uganda’s first phase. The Chinese Exim Bank is the financier of the railway project for both Kenya and Uganda. The financing deal between Uganda and China Exim Bank on the Malaba-Kampala line could be concluded in September, when the leaders are expected to visit Beijing for the Forum on China-Africa Co-operation. SGR PROGRESS The Chinese officials’ meeting with the Ugandan leadership came as Kampala intensified its efforts in renovating its meter-gauge railway while it awaits a financing deal for the SGR. “By July, the financing agreement made with the Chinese contractor and...

The Intergovernmental Authority on Development has adopted a regional policy framework on cross-border trade that promises to be a lifeline for the region’s small-scale traders. Trade ministers from Djibouti, South Sudan, Sudan, Uganda, Somalia and Kenya and a representative from Ethiopia meeting in Mombasa last Thursday signed a policy document seeking to strengthen border security systems, support trade facilitation at border crossings and promote participation of border and communities in policy making. The Informal Cross-Border Security Governance policy tackles issues related to food security, employment, peace and security in the region’s borderlands. Kenya’s Trade Cabinet Secretary Adan Mohamed said the initiative is expected to sensitise on cross-border trade among member states. “The beneficiaries are likely to be women and youth, and we are happy that today we have a framework that will recognise the socioeconomic contribution of informal cross-border trade within member states,” Mr Mohamed said. “It will also help us understand the linkages between cross-border informal trade and cross-border security,” he added. The policy document will be presented to the Igad Heads of State for onward transmission to the African Union. Mr Mohamed said that improving cross-border trade is one step towards the Continental Free Trade Area that the Heads of State signed in Kigali in March. Uganda’s Trade Minister Amelia Kyambadde said the policy will regulate the informal trade within Igad countries and provide an opportunity to grow the informal sector. HORN OF AFRICA SUMMIT TO DISCUSS CROSS-BORDER TRADE, SECURITY. “This policy will have an impact because every...

Investors at the Nairobi Securities Exchange last week incurred a loss of Sh118.7 billion as a result of tension in global trade, sparked by looming trade war between the U.S. and China. Central Bank Weekly statistical bulletin show that all indices and market capitalization declined, slowing post dividend growth momentum witnessed a fortnight ago when the bourse recorded an equity turnover growth of 46.82 percent. The bourse recorded a market capitalisation Sh2.51 trillion down from Sh2.63 trillion recorded the previous week, representing 4.5 per cent drop. The Nairobi All Share Index (NASI) posted 170.19 points, 4.5 per cent lower than 178.21 witnessed the previous week. NSE20 and NSE25 shrunk by 2.9 and 1.03 per cent respectively. "Shareholders incurred a paper loss of Sh 118.7 billion as measured by decline in market capitalisation. The low performance could be a reflection of trends in global markets in reaction to tensions in global trade that may impact global economy," said CBK. Last week, US President Donald Trump said he was considering an additional 10 per cent tariff on $200 billion (Sh20 trillion) worth of Chinese goods, triggering a sharp reaction overseas. This saw major stocks register an average drop of 150 basis points. Global cigarette firm British American Tobacco took the most hit as its share shed Sh10 to close at Sh610 on Friday. Generally translating into a Sh1 billion loss considering that it is has 100 million shares at NSE. Other firms whose share sunk include I&M Bank which shed Sh2 to...

EAC countries have turned to tax incentives in a bid to boost industrialisation. Finance ministers from Kenya Uganda, Rwanda and Tanzania all presented their budgets on Thursday last week. The four countries also had one common theme; ‘Industrialisation for Job Creation and Shared Prosperity’. The budgets, however, took varied approaches to spur their growth agenda. The budget speeches showed how the governments planned to support and promote their priority areas. One common incentive was tax exemptions. For instance, neighbouring Tanzania is moving to support their local pharmaceutical industry by exempting tax on packaging materials produced specifically for use by products in the field. Experts say that among other things, this is likely to act as an incentive for investors and entrepreneurs in the sector. The Tanzanian Government also exempted tax on purchase of sanitary pads a move which gender activists have applauded saying it will significantly reduce the prices of the items. David Baliraine a senior Manager at Ernst and Young noted that the East African nation had also exempted taxes on government projects funded by non-concessional loans and also on agreements signed between the Government and a Financial Institution. This, he noted is a move geared at attracting more funding for projects being undertaken in the country. Baliraine was speaking at a breakfast meeting convened to analyse the budget for the firm’s clients and stakeholders on Monday morning. Exemption of imported animal and poultry feeds additives was also heighted in the new Tanzanian budget which points towards promotion of...

December 20 is the target to have at least 30 African countries to have ratified the African Continental Free Trade Area (AfCTA), members of the Senate heard on Tuesday. Updating the Senators on where Rwanda stands since it ratified the agreement in April, the Minister of Trade and Industry; Vincent Munyeshyaka said that though only 22 countries are required to sign before the agreement comes into force, the target is to have 30. Rwanda is the current chair of the African Union. “The threshold is normally 22 countries but we are targeting 30 by December. We know it’s ambitious but are hoping that by end of the July African Heads of State summit, we will have seen some improvements,” he said. So far, just four countries – Rwanda, Kenya, Ghana and Niger, submitted their instruments of ratification to Treaty to the African Union Secretariat in Addis, Ethiopia. If the 22-country threshold is met, it means the agreement, which intends to make Africa the largest trading bloc in the world, can get into force. Munyeshyaka said that to achieve this, he was lobbying other Ministers of trade but there was also support from the African Union Commission and the AfCFTA both which had their lobbying campaigns. He pointed out that all the concerned institutions were working tirelessly to create a continent that would be viewed as a global competitor on the world market. “To do that, we have to prioritize some things such as the service sector, beating non-tariff barriers and open...