Sh1.2 trillion deal struck but not all are winners after US President visit

By: ANDREW TEYIE

Fresh details of agreements worth up to Sh 1.2 trillion struck between the American government and Kenya during President Barack Obama’s historic visit can now be revealed.

This came as various groups, institutions and individuals took stock of the visit one week later.

Documents show that National Treasury Cabinet Secretary Henry Rotich and US Secretary of Commerce Penny Pritzker signed a memorandum on a series of mega deals that have created a new economic development partnership that will see investments in the Lamu port, an oil pipeline, power plants, urban commuter rail and highways, and various projects in the health and tourism sectors.

The massive agreements are expected to deepen Kenya-American ties at a time when the Chinese are flexing their financial and diplomatic muscles.

The commercial arrangements signed between the US and Kenya governments include an investment of $9.5 billion (Sh900 billion) in the Lamu Port South Sudan and Ethiopia Transport Corridor (Lapsset) and an additional $7.55 billion (Sh755 billion) in the projected value of exports to flow through the same corridor.

PASSENGER TRAINS

The MoU will also see American company General Electric (GE) deliver 20 passenger trains to Kenya Railways (KR) to the tune of US$ 72 million (Sh7.2 billion). The passenger trains are expected to ease traffic congestion in Nairobi.

Wildlife conservation in northern Kenya also got a boost by the provision of financing valued at $20 million (Sh2 billion).

Cabinet Secretary for Commerce and Tourism Phyllis Kandie said that the impact of President Obama’s visit will be felt in Kenya for many years to come.

Ms Kandie said that the trip and the Global Entrepreneurship Summit (GES) boosted Kenya’s credentials as a regional leader and investment destination.

“The overall impact of GES and President Obama’s visit is huge for Kenya on three levels. Kenya enjoyed a positive spotlight globally.

It was a major boost for the tourism sector — and not just because of the fact that hotels in Nairobi and its environs were full in a short time but the long-term effect is that more visitors will now have the confidence to come here,” said the Cabinet Secretary.

According to the documents seen by the Sunday Nation, the American government also undertook to increase funding for the Determined Resilient Empowered AIDS Free Mentorship Programme (DREAMS/ACT) programme to the tune of $519 million (Sh51.9 billion).

“DREAMS is a two year $30 million initiative to reduce new infections in adolescent girls and young women in Kenya.

Working closely in partnership with the Government of Kenya and other key stakeholders, a country determined core package of evidence-based interventions that have successfully addressed HIV risk behaviours, HIV transmission and gender-based violence, will be implemented,” read the documents.

The documents also brought out the fact that Kenya has the largest level of funding globally for the US-led President’s Emergency Plan for AIDS Relief (Pepfar).

The programme aims to “accelerate Children’s HIV/AIDS Treatment (ACT) in a two year, $28,169,122 initiative to reduce HIV morbidity and mortality of infants, children and adolescents (0-14 years) living with HIV in Kenya”.

According to the MoU, the Americans further undertook to have the Overseas Private Investment Corporation (OPIC) invest in infrastructure development.

The United States Trade and Development Agency (USTDA) will also put in funds although Kenya in turn offered the agency and OPIC tax concessions.

US GOVT’S INTERESTS

“The United States Government confirms its interest in supporting the development of strategic infrastructure priority projects in Kenya and promoting US private sector participation in such projects, and confirms its intent to engage, as appropriate and consistent with its authority, its constituent agencies and programmes including but not limited to those identified herein,” says the MoU signed by the two governments.

According to Kandie, Kenya now has the challenge of seizing the opportunity and building on it.

“We cannot afford to sit back and congratulate ourselves on a job well done.

“The world, and especially Africa, is full of countries that are eager to achieve the same rewards as Kenya.

“We must take the opportunities that have been presented to us to ensure that we continue to build a strong and resilient economy that builds prosperity now but also safeguards the country’s long-term economic future,” she said.

The Lapsset Corridor Development Authority CEO Sylvester Kasuku called on private sector players to position themselves to benefit.

“We urge Kenya’s Private Sector to take advantage of the new economic partnership created by the MoU and seek partnerships with American investors to tap US investment capital and invest in LAPSSET Corridor Projects,” he said.

The MoU also tied Kenya to promote collaboration between Kenyans and the American public and private sector institutions with an aim to promote capacity building in East Africa’s biggest economy.

The government committed to allow private companies implementing infrastructure projects to be responsible for securing financing for such projects.

The Kenya government agreed that one of the potential financing sources may include OPIC, other US government agencies, multilateral organisations, private sector capital or other financing sources.

US RESOURCES

“The Government of Kenya expresses its support for the US governmental resources that the United States government intends to make available, consistent with US laws and regulations, to facilitate potential US private sector participation in strategic infrastructure priority projects in Kenya and is committed to ensuring that such resources provided will be free from taxation within Kenya,” say the documents.

The two governments will meet once a year to review progress within the framework of the MOU.

Last weekend, President Obama announced publicly that the US will increase funding for Kenya’s war against terrorism.

“We stand united in the fight against terrorism and we will be channelling more money towards this,” he said.

Mr Obama said the ongoing campaign against Al-Shabaab terrorists had significantly managed to push the insurgents out of swathes of territories in Somalia.

“Al-Shabaab prefer soft targets because of this,” he said.

Standing at State House in the land of his father, President Obama said his government would support reforms in key institutions of government.

“We are working with the Kenyan government to strengthen the Judiciary as well as reforms in the police,” he said.

The Obama visit has stirred debate on the potential winners from the historic trip.

Opposition leaders and sections of the civil society were unhappy with the visit because they were not accorded as much time, space and recognition compared to when US Secretary of State John Kerry came calling in May.

Some of the big winners were President Kenyatta, youth, women, high-end hotels and meeting venues and young entrepreneurs.

WINNERS

The Obama family in Kenya, Cabinet Secretaries Amina Mohammed (Foreign Affairs), Phyllis Kandie, Adan Mohamed (Industrialisation) and Joseph Nkaissery (Interior) who played a key role were also seen as winners.

According to analysts, having started his presidency in 2013 with the International Criminal Court case hanging over his head, the Obama visit was the pinnacle of President Kenyatta’s time in office so far.

But Cord co-principals Raila Odinga, Kalonzo Musyoka, Moses Wetang’ula, and Narc-Kenya leader Martha Karua, who briefly met President Obama last Sunday, after his address at the Kasarani Stadium, appeared to have had their calls for US pressure on the Jubilee government rejected.

Also deemed to have lost out was the mainstream civil society, who hoped to have a closed door meeting with the President only for the meeting to be aired live on national television stations.

Opinion is, however, divided as to whether Deputy President William Ruto won or lost despite having met President Obama after previous speculation that he would be isolated.