Why big project investors feel let down by government
Over the last decade, Kenya has made significant steps in improving the ease of doing business, with the country climbing 19 places in the latest ranking by the World Bank. According to the most recent World Bank annual ratings, Kenya is ranked 61 among 190 economies in the ease of doing business; a significant improvement from 80 in 2017.
Ease of Doing Business in Kenya averaged 101.82 from 2008 until 2018, reaching an all-time high of 129 in 2013 and a record low of 61 in 2018. This has not only enabled domestic investors, but also continue to attract much-needed Foreign Direct Investments (FDI) into the country.
Today, we pride ourselves as the regional investment hub — hosting regional headquarters for some of the leading global brands like Coca Cola, Google, General Electric, Bharti’s Airtel, IBM, among others. But even more importantly attracting FDI to the tune of $9, 8 billion in the past 10 years.
Analysts predict that if the trend is sustained, Kenya should be on course to achieve the middle-income economy stature sooner than later in line with our economic blueprint, Vision 2030. However, to achieve this, as a country we would have to consistently deliver on key transformational projects that will support growth and employment creation.
While the Government has continued to make progress by introducing a variety of reforms, including access to credit, cross border trade, taxation reforms, availability of electricity, dealing with construction permits, and protecting minority investors to nurture entrepreneurship and private enterprise, there is a need to follow this through with on-ground facilitation in the execution of the projects of national importance.
In some instances, where investors of big-ticket projects have set up shop in Kenya, they have been left on their own to maintain complex relationships that range from community engagements, political interests and interference, multi-tax and levies by a complex web of State agencies and county governments, among others. In some cases, the investors are left to bear the heavy responsibility of providing public goods like water, road, food to marginalized communities.
In the last five years, critical projects of national importance, namely LAPSSET project, Kinangop Wind Farm Project, Oil Exploration in Turkana, AMU Power, Standard Gauge Railways, Base Titanium project, Mui Coal, Ketraco and most recently Magadi Soda; have faced many challenges, especially with host communities.
While putting up these companies, there is focus on profit for sustainability, job creation and to pay taxes.
They also consider people through uplifting of the community projects and environment in a bid to mitigate climate change.
We have seen the companies have many times been left alone to meet most needs of the community, for instance, water, and yet when politicians develop business interests, they go for these same companies and do not count the losses from jobs; the country’s image and lost taxes, among others.
The recent invasion of Tata Chemicals facilities in Magadi led by Kajiado County leadership is just one of many examples of challenges faced by investors, both local and foreign. Whereas the Kajiado County government or indeed other counties may have legitimate concerns; there is a need to exercise restrain in resolving the matters and more importantly follow the due process of the law. This is how civilized societies resolve issues.
Further north, Tullow Oil and Partners (Africa Oil & Total) have successfully completed exploration and appraisal phase that started in the year 2011.
This has resulted in the discovery of commercially viable resources of which the Kenya Joint Venture Partners, in collaboration with the Ministry of Petroleum and Mining, are working to develop. From a capital investment perspective, circa $3 billion will be spent for Phase 1 of the project, making Project Oil Kenya the largest private sector funded project in Kenya. The project includes; upstream development, Crude oil Pipeline and Marine evacuation facilities at Lamu Port.
It is against this background therefore that Kepsa fraternity salutes the President for issuing Executive Order No.1 of 2019, which established the framework for Co-ordination and Implementation of National Government Development Programmes and Projects; we see the framework as a panacea to driving these projects forward for the sake of national development and greater public good.
To facilitate these investments, the government through the National Development Implementation and Co-ordination framework should provide a more proactive leadership role in ensuring that all bottlenecks facing the projects are resolved to enable current and prospective investors deploy their capital in the country.
It is important to remember that global capital is “shy” and will only flow where there is certainty for return on investment. As Kepsa, we have a strong belief that Kenya has all the ingredients to become the key destination for investors in Africa.
Ms Kariuki is the Chief Executive Officer of the Kenya Private Sector Alliance (Kepsa)[email protected]
We are undertaking a survey to help us improve our content for you. This will only take 1 minute of your time, please give us your feedback by clicking HERE. All responses will be confidential.
World Bank annual ratingsEase of Doing Business