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Private sector eyes 40 pc stake in multi-billion regional tenders

By Graham Kajilwa | October 19th 2015

The private sector companies in the East and Central Africa region are looking to tap into billions of shillings worth of investment opportunities arising from the Northern Corridor Integration Projects (NCIP).

A security officer keep guard on a section of the Standard Guage Railway (SGR) line fly over bridge at Tsavo River in Taita Taveta County which is under construction by the China and Bridges Corperation Company, June 06, 2015. [PHOTO BY GIDEON MAUNDU/STANDARD].

Through the East African Business Council (EABC), the firms are angling for a 40 per cent share in the projects, from conceptualisation, implementation to maintenance. They said this is because many raw materials are sourced from local producers and manufacturers.

EABC Chairman Dennis Karera said major projects in the region have for long disadvantaged the local companies especially on tax policies. "International companies get waivers from our governments while our local companies do not. This makes our products to be more expensive due to high production costs, leaving the platform to foreign companies," said Karera.

This comes following renewed calls by the private sector to have local companies play a bigger role in the development of mega-projects in the East African region, which are currently dominated almost entirely by Chinese State-owned firms.
Karera called for the harmonisation of trade laws and products quality standards to avoid local manufacturers being locked out from getting the share in the business.

"Also, every contract signed by the Government should have an element of technology transfer to benefit our local innovators," he said.

Karera was addressing regional ministers on the 11th Summit of NCIP organised by Kenya Private Sector Alliance (Kepsa), which was hosted by Foreign Affair Cabinet Secretary Amina Mohamed. Kepsa Chairman Dennis Awori said unbundling (segmenting) of the NCIP will ensure quick implementation.

"Governments should award the projects through Private Public Partnerships. This will enable the countries to fast-track the projects," he said. Awori noted that there is no need to outsource from foreign companies.

"Like in Information Technology, the region is well equipped. What we need is the private sector to commercialise and develop the sector through government intervention."

The Northern Corridor project involves rail, road and port infrastructure to connect Kenya, Uganda, Rwanda and South Sudan. The project is expected to fast-track the region's economic development. There are currently 16 mega projects identified under NCIP, top among them the Standard Gauge Railway, Lamu port, South Sudan Ethiopia Transport Corridor (Lapsset), oil refinery and pipeline infrastructure.

To enable the private sector fully participate in the investment opportunities available under NCIP, Kepsa recently established an NCIP Consortium. Kepsa and each of the other private sector apex business bodies in the region will coordinate the participation of their respective private sector members in identified NCIP investment opportunities.

The new consortium by Kepsa is expected to pool private sector human and financial resources to enable local manufacturers and suppliers to compete with Chinese contractors and get a bigger slice of the region's development.

Data from a recent report by consulting firm Deloitte indicated China accounted for over $20 billion (Sh2 trillion) worth of infrastructure development in the East African region in 2014 alone. The Asian economic giant currently holds 31 per cent of the region's $60 billion (Sh6.1 trillion) infrastructure projects, almost doubling the 19 per cent share it held in 2013.

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