The shilling continues to free fall against the US dollar. Clearly, the recent steps taken by the Central Bank of Kenya (CBK) to curtail liquidity in the system to curb speculation in the market and to raise the cost of money seem not to have yielded the desired results. The fall also proves that the currency is not under pressure because of excess speculation but because of external factors such as a strong dollar and because of fundamental weaknesses of the economy. The only lasting solution for the shilling’s problems is to reduce the current account deficit (CAD) to a sustainable level. To do this, we need structural solutions from the government, not the CBK. We need the government to come up with out-of-the-box-thinking’ solutions rather than leave everything to the apex bank. The CBK has very little policy space or instruments; all it can do in the interim is to stabilise the market volatility and that will come at a cost; high lending rates and low economic growth. It is time we came up with strategies that will help curb forex outflow against a backdrop of a weak currency. The depreciation of the shilling against the US dollar by more than 10 per cent this year has added to Kenya’s economic woes and could push its CAD to unprecedented levels. The government can help contain CAD by embarking on a shilling-centric approach to oil imports. This envisages bringing down the CAD by cutting down on dollar-denominated oil imports, which...

Economists in the region are advocating for innovative thinking as a mechanism to jumpstart African integration, something that has been proving to be elusive for long. Speaking during the plenary session of the building bridges East Africa regional workshop on developing national business communities and regional integration organised by UONGOZI Institute in Dar es Salaam, a World Bank consultant, Mr John Kalisa said that currently the business community was facing many hurdles. "Increasingly due to fluctuations in foreign exchange rates with the US Dollar, the East African business community is losing out a lot because of the exchange rates with doing business and only innovative ways are the answer," he said. Mr Kalisa cited that the cost of doing business in most regions of the continent are very high due to these exchange rates and therefore Rwanda and Kenya are in dialogue such that their business community can use their own currencies in the other country. He said as China continues to be an aggressive investor in the region, a number of countries in the EAC are laying out mechanisms such that they can directly exchange their currencies into the yuan instead of first changing into US dollar. "For regional integration on a continent as diverse as Africa, the way forward is to expand market size through market integration, collaborate in building productive and industrial capacity and develop affordable, effective infrastructure and services to lower the cost of doing business," he cited. A fellow of the London School of Economics...

Mombasa port Thursday received the biggest vessel to ever call at the facility, signalling positive results following the deepening of the harbour to 15 metres and widening of the turning basin to 300 metres. MV Clemens Schulte has a capacity of 5,466TEUs and will discharge 1,710 containers while 3,505 export containers will be loaded. With a length of 255 metres and 37.5 metres wide, the vessel — operated by Maersk shipping line — is twice the length of an international football pitch. Kenya Ports Authority (KPA) managing director Gichiri Ndua said the arrival of the vessel was an indication that shipping lines were exploiting capacity upgrade at the port and that there was growing confidence in the efficiency of the facility. He said that when another large ship, MV Maersk Cairo, called at the port in February last year, they made 834 moves (the number of times a crane picks a container from the vessel and places it on a waiting truck). “This marks an important milestone in our agenda towards becoming a world class sea port of choice. It also signifies the benefits accrued from the port’s completed capacity expansion projects,” he said. Some of the completed projects include dredging of the channel and construction of the 240-metre Berth 19, which increased the length of the port’s quay to 840 metres. This means that the port is able to accommodate three vessels of MV Clemens Schulte’s size. Shipping lines benefit from economies of scale when they operate larger vessels...

The recent state visit by Kenya's President Uhuru Kenyatta served to keep communication lines open between our two nations, which is critical for our mutual economic and development fortunes. While here, he discussed progress on key infrastructure projects such as the oil pipeline and the standard gauge railway that the two countries are committed to developing. The oil pipeline will help both countries evacuate our oil in coming years while the railway line will reduce transportation costs on the key route to the sea for the two countries. By accident of history, our two countries are bound together at the hip and despite past attempts to force a wedge between us, the mutual interests of our peoples mean we have always found a way to resolve our differences. Ever since the British got it in their heads that they needed to control the source of River Nile for strategic purposes, our two countries have become each other's largest trading partner. During the hard 1970s and 80s, many Ugandans sought refuge in our eastern neighbour and recently, after the post-election violence in 2007-08, some Kenyans fled here for safety. A few days ago, Kenyatta, in defending an initiative to import sugar from Uganda, reported that his country exports $700m worth of goods to Uganda while importing goods worth $150m from the same. He argued that he would rather import sugar from Uganda than from Brazil if we (Uganda) have the surplus to bridge their shortfall. At the Uganda National Chamber of...

NAIROBI Aug 19 (Reuters) - Shipping activity at Kenya's port of Mombasa, East Africa's biggest, rose by 11 percent in the first half of 2015 as vessel wait times fell, the national port authority said on Wednesday. Gichiri Ndua, Kenya Ports Authority managing director, said the performance reflected progress in the integration of east African countries to ease the flow of trade. he port, a major trade gateway to east Africa, handles imports such as fuel for Uganda, Burundi, Rwanda, South Sudan and eastern Democratic Republic of the Congo. Kenya, which faces increasing competition from other countries like Tanzania and Djibouti in the bid to serve land-locked and rapidly-growing neighbours, said increasing port efficiency is central to its infrastructure plan. Kenya has begun construction of a Chinese-funded rail line, which will connect Mombasa to the Ugandan capital Kampala, speeding the flow of goods and taking pressure off its congested road network. In the first half of this year, the port handled 13.21 million tonnes of goods, 1.3 million tonnes more than in the same period a year ago, Ndua said. Last year, it handled 24.9 million tonnes of cargo - the highest volume in the port's history and an 11.5 percent increase from 2013, he said. Between 2013 and 2014, the so-called dwell time of cargo ships dropped by a day, to 3.9 days. Average turnaround time remained the same - 3.5 days - from 2013 to 2014, despite the increased activity at the port, he said. Inefficiency at the...

Selfish interests and failure to adopt policies agreed upon by the east African Community member states are some of the road blocks to the economic empowerment of the region. It has emerged that though member states have good investment policies aimed at boosting their economies, such policies are yet to be adopted at the regional level. The East African Legislative Assembly wants a regional investment policy to allow the region push in the same direction on investment issues. Source: NTV UG

The three-day visit of Kenyan President Uhuru Kenyatta to his counterpart in Uganda, President Yoweri Museveni, has led the two countries to agree on a number of trade and oil deals that have sparked controversy in Kenya. One of the most significant agreements involves the ambitious construction of a 1500km-long pipeline which could turn East Africa into a significant oil exporting region. The pipeline’s path had been disputed for a year, but it has now been agreed to include Kenya, Uganda, South Sudan, and potentially Ethiopia, and will be part of the bigger Lamu Port Southern Sudan-Ethiopia Transport Corridor. As a condition to the path’s agreement, Kenya has had to take on the project’s financing and securities guarantees, due to the uncertainty of the project’s results and concerns over Al-Shabaab’s terrorist activities in northern Kenya. “The pipeline route was not Uganda’s preferred route. The agreed route is longer and untested against the southern route that would have followed an existing pipeline route,” says Jubril Adedayo Kareem, energy research analyst at Ecobank. “The waxy nature of tested crude from Kenya means the pipeline will have to be heated above 40 degrees Celsius. This specific requirement further complicates the project as a heated pipeline of such length has never been attempted in the world, which means the Kenya section of the pipeline will be longer, much more complicated and more expensive. Uganda is only trying to protect itself by requesting for such guarantees,” he explains. It remains unclear which companies will become...

President Uhuru Kenyatta will Thursday morning hold a meeting with top executives of Japanese multinationals who are in Nairobi seeking a slice of investment opportunities, a month after a similar visit by their American rivals led by US leader Barack Obama. Chief executives representing 84 conglomerates, including Toyota Tsusho and Mitsubishi, are in the country to fight for a share of emerging opportunities in both the public and private sectors that have caught the attention of the World’s top two economies, US and China. Japan, the third largest economy in the World, was keen on grabbing part of the ongoing and planned mega infrastructure projects including the Sh3 trillion-worth Lamu Port South Sudan-Ethiopia Transport project. “We convinced them to come here in our previous visit to Tokyo, and they are to look for the right kind of investments for their respective companies,” Amb Amina Mohamed, the foreign affairs Cabinet Secretary said. Wednesday’s daylong meeting held at the Serena Hotel brought together business executives from Japan and their local counterparts. Japan is the source of top three vehicle makes in Kenya and the balance of trade is heavily against Kenya which exports comparatively low value commodities consisting tea, coffee and cut flowers. In Thursday’s meeting at State House, the Japanese are expected to reveal commitments that they could be making in both investments and business. China has specifically made major inroads in the upcoming infrastructure projects including the Sh300 billion Standard Gauge Railway linking Mombasa and Nairobi, with the expectation that...

The Kenyan sugar sector could be headed for a complete shutdown in February next year after the State said there would be no additional caps on duty-free importation. Trade Permanent Secretary Karanja Kibicho said the country could not be granted any further safeguards on sugar importation from the 19-member Common Markets for Eastern and Southern Africa (Comesa). That proposition could push the current debate on the sugar import deal with Uganda to the back burner. “All members of Comesa who have the capacity to have a surplus of any product, in this case sugar, are free to export to this country if there is a deficit,” Mr Kibicho said at a media briefing Wednesday. Major relief An estimated six million Kenyans depend on the sugar supply chain, with a majority being cane farmers, who will inadvertently be the most exposed in this latest development. On the flip side, however, allowing unlimited imports could provide a major relief for consumers through cheaper sugar. Kenya had exhausted all allowable protectionist periods under international trade guidelines, Kibicho said, and Comesa could not even consider another request. He was responding to questions raised by the Opposition on an alleged sugar importation deal said to have been signed last week during President Uhuru Kenyatta’s State visit to Uganda. Foreign Affairs and Trade Cabinet Secretary Amina Mohamed has twice denied that such a deal was entered into, even though some top Government officials have said some form of agreement was signed. Amid the continued debate on...

WOMEN entrepreneurs in the region will use the second East Africa Community Women in Business conference that opens today in Nairobi, to explore opportunities offered by the Single Customs Territory, the EAC secretariat has said According to the Arusha based office, the conference on the role of women in socio-economic development and business will also explore openings in the common market. The two-day conference themed "Advancing and expanding the participation of business women in intra-EAC trade", targets 350 women entrepreneurs and exhibitors from the region. “Among other outputs, the second EAC conference is expected to identify sources of affordable financing for women in business and recommend a way forward,” said EAC. It will also be used to strengthen and expand the network of women in business. Source: The Star