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Stalled projects in Uhuru, Kibaki eras cross Sh9trn

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Stalled projects in Uhuru, Kibaki eras cross Sh9trn


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A road under construction. FILE PHOTO | NMG

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Summary

  • The World Bank and IMF call for the cancellation of a majority of incomplete infrastructure jobs.
  • The value of stalled projects is equivalent to the size of Kenya’s entire economy, reflecting the magnitude of the incomplete and abandoned infrastructure upgrades.
  • Two decades of debt-funded infrastructure growth policy have seen officials rush to initiate hundreds of projects beyond what the country can afford, egged on by connected tenderpreneurs.

Hundreds of development projects worth Sh9 trillion started during the Mwai Kibaki and Uhuru Kenyatta regimes have stalled, disclosures in Parliament show.

The National Assembly Budget Committee disclosed the projects, including roads, office blocks, dams and irrigation projects were started in breach of guidelines that require secure funding, raising concerns about the country’s planning and public spending decisions.

The huge number of stalled projects, which comes with delayed payments to contractors, is a major contributor to the cash crunch in the private sector that has ultimately precipitated job losses and closure of businesses.

The projects are also accumulating pending bills, increasing completion costs and could expose Kenya to legal compensation claims by slighted contractors if cancelled.

The value of stalled projects is equivalent to the size of Kenya’s entire economy, reflecting the magnitude of the incomplete and abandoned infrastructure upgrades.

The World Bank and the International Monetary Fund (IMF) have called for the cancellation of a majority of incomplete infrastructure projects.

A significant number of the stalled projects were initiated during the Kibaki era that started in December 2002 and became white elephants during the transition to Devolution in 2013, when President Kenyatta romped into power.

County governments failed to allocate funds for projects started or were ongoing in the second term of President Kibaki.

“The total cost of stalled projects is Sh9 trillion. This is a worrying trend as it indicates there is no adherence to the project guidelines issued by the National Treasury,” the Budget committee chaired by Kanini Kega said in the supplementary budget 2 report to Parliament.

Two decades of debt-funded infrastructure growth policy have seen officials rush to initiate hundreds of projects beyond what the country can afford, egged on by connected tenderpreneurs seeking to secure multibillion-shilling deals with the State.

Kenya has borrowed a cumulative Sh6.8 trillion over the past 20 twenty years with 84 percent of the loans tapped under the Jubilee government since 2013, promising ambitious infrastructure projects.

The World Bank and the IMF have asked the government to cancel some of the stalled projects in the wake of a cash crunch in the wake of the Covid-19 pandemic.

Kenya Public Expenditure Review published by the World Bank showed Kenya had 4,000 ongoing projects, many of which are significantly delayed, incomplete or stalled.

The Bretton Woods institution says that 522 projects worth Sh1 trillion ($10 billion) that are completely dormant should be considered for cancellation to save on costs.

The WB said that 40 percent of the projects became white elephants during the transition to devolved system of governance.

About 53 projects are dormant because of diverse factors, including litigation, wayleave challenges, acquisition of land, and funding suspension by the donor.

Other reasons for stalling projects have been the imposition of budget ceilings by the Treasury keen on taming expenditure.

The period leading up to the 2017 General Election, in particular, saw a significant increase in project launches — particularly roads — by the Jubilee and county governments as they tried to win votes.

Many of these were not budgeted for, and the shift by the government after the elections in development spending focus to the Big Four Agenda-aligned projects has left many of them incomplete.

The pending bills issue has now become one of the major sticking points in the economy at both national and county levels.

Kenya promised the IMF it will complete stocktaking of projects by March this year, appoint a Public Investment Management (PIM) director by July and ensure new projects have sufficient funds to complete them.

“By July 2021, officials will ensure that all new projects are based on clearly defined criteria and predetermined costing methodologies in line with the PIM regulations and guidelines,” the IMF revealed in the agreements it has reached with the government for the recent Sh257 billion loan.

In the 2021 Budget Policy statement, Treasury secretary Ukur Yatani said the government was considering cancelling about a third of the stalled public projects which could yield 1.5 percent of the GDP in savings equivalent to Sh152.35 billion of Kenya’s Sh10.157 trillion economy.



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KQ resumes Mumbai flights after 4 months

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KQ resumes Mumbai flights after 4 months


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A Kenya Airways aircraft at JKIA. FILE PHOTO | NMG

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Summary

  • Kenya Airways will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.
  • The airline in a notice to its customers yesterday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

Kenya Airways #ticker:KQ will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.

The airline in a notice to its customers Monday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

The airline will then resume full operations on the route on September 20, flying three times per week on the Indian route, which is one of the most lucrative destinations on its network.

Passengers on the route will part with Sh46,000 ($419) for one-way air ticket on economy class seats from Nairobi to Mumbai- prices that are relatively the same compared to what it was charging before the Covid-19 pandemic.

“Welcome back onboard! Fly from Nairobi to Mumbai starting Thursday 16th September with normal schedules resuming from Monday 20th September 2021,” said the airline in a notice to its customers yesterday.

KQ Suspended passenger flights to and from Mumbai on April 30 until further notice, following a government directive on travel between India and Kenya due to a Covid-19 crisis in that country.

The airline said on Friday that passengers who had booked tickets after May 1, the date of the last flight from Mumbai to Nairobi, will have to change their plans.

Affected passengers, KQ said, could also take vouchers for the value of their fare for future travel within 12 months.

India has seen soaring infection rates in the recent days, since the discovery of a new virus variant. Last month, India put on lockdown one of the states following a spike in cases of Covid-19.

Other countries that have banned flights to India include France, the UK Bangladesh, Oman and Hong Kong that have banned travel to and from India or asked their nationals coming from the Asian country to isolate themselves in government-approved hotels.

India has so far detected 33,264,175 corona virus cases with the number of deaths hitting 442,874 as at September 13.

A large number of patients from Kenya also travel to India every year for specialised medical treatment, especially cancer care, helping to drive medical tourism in the densely populated country that boasts affordable and easily accessible healthcare.



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Lower import volumes push mitumba prices to new highs

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Lower import volumes push mitumba prices to new highs


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Man pulls a cart loaded with second-hand clothes at Gikomba Market in Nairobi. FILE PHOTO | NMG

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Summary

  • Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.
  • Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.
  • Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

The average price of a tonne of second-hand clothing items imported into the country crossed the Sh100,000 mark for the first time last year on reduced volumes in the wake of safety protocols and guidelines to curb spread of coronavirus.

Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.

Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.

Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

Last year’s drop was the first dip since 2011 when 76,533 tonnes were shipped in compared with 80,423 tonnes the previous year, the official data collated by the Kenya National Bureau of Statistics (KNBS) shows.

The import bill for the merchandise amounted to Sh12.24 billion, a drop of 31.11 percent, or Sh5.53 billion, year-on-year.

TIn imposing the temporary ban on used clothes, Kebs had applied a standard which prohibits buying second-hand clothes from countries experiencing epidemics to ensure disease-causing microorganisms are not imported into Kenya.

Higher quality and relatively lower prices for mitumba has continued to drive demand for used clothes at expense of locally-made products amid higher margins enjoyed by traders largely operating in informal markets.

The lucrative second-hand clothing market has seen traders from China —a key source market for the merchandise —open shops in Gikomba, Kenya’s largest informal market for mitumba, in recent years to cash in rising demand.

Earnings from exports of articles of apparel and clothing accessories fell 5.32 percent to Sh32.92 billion last year compared with 2019, data indicates.



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Court backs Atwoli union in horticulture membership feud

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Court backs Atwoli union in horticulture membership feud


Cotu boss Francis Atwoli

Cotu boss Francis Atwoli. FILE PHOTO | NMG

Summary

  • A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.
  • Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.

Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

Mr Atwoli is the secretary-general of KPAWU. The rival union claimed KPAWU had encroached on its area of workers’ representation.

Justice James Rika, however, dismissed the claim and ruled that the dispute should have been taken through conciliation, and was therefore presented in court prematurely.

He also stated that Kefhau must go beyond its registration and recruit sufficient members from the employers, to be granted recognition and organisational rights.

“Registration on its own, does not afford the claimant (Kefhau) recognition. Until there is proof that Kefhau has satisfied Section 54 of the Labour Relations Act, the status quo must be maintained,” said the judge.

“Kefhau must recruit at least 50 percent plus one, of the unionisable employees in the floriculture and horticulture industry, members of the Agricultural Employers Association to be considered for recognition,” he stated.

He noted that there is a Recognition Agreement and CBA, binding Mr Atwoli’s union and Agricultural Employers Association, affecting 73 Flower Growers Group of employers, and over 60,000 employees.

“It is objectionable for Kefhau to be allowed organisational rights, and the legitimacy to receive trade union dues and agency fees, from over 60,000 employees, just on the strength of registration as a trade union,” said the judge.

Kefhau wanted the court to declare that it is the sole trade union, which is allowed by its constitution to carry out activities in the export floriculture and vegetable industry, and an order restraining Mr Atwoli’s from representing workers in that area.



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