East Africa Economic Report

By The Conversation In December 2018, a leaked letter from the Kenyan auditor-general’s office sparked a rumor that Kenya had staked its bustling Mombasa Port as collateral for the Chinese-financed Standard Gauge Railway. Our new research shows why the collateral rumour is wrong. The former auditor-general, Edward Ouko, was completing the 2017/18 audit of the national ports authority. He warned that the port authority’s assets – of which Mombasa Port is the most valuable – risked being taken over by China Eximbank if Kenya defaulted on the US$3.6 billion railway loans. The profitable Mombasa Port is East Africa’s main international trade gateway. Launched in 2017, the railway was intended to seamlessly link the port to Kenya’s capital, Nairobi, and landlocked countries beyond. The Kenyan fears mirrored another tale widely circulated earlier in 2018. In that story, China was said to have “seized” Hambantota Port in Sri Lanka when the island nation had trouble repaying Chinese lo

The new Railway hardware: Project inundated with graft claims  The Media in Africa is increasingly becoming the purveyor of falsehoods. It sees graft in every development project in Africa even without an iota of evidence.  Take for instance the Supreme Court of Kenya, SOCK, ruling two weeks ago that acquitted the Kenya Railways Corporation, KRC, of any wrongdoing in the procurement of the contract to construct the Standard Gauge Railway, SGR.  The Court ruled that the Corporation was implementing a directive of the Executive, which by Law, is allowed to initiate development projects in Kenya.  The Corporation did not initiate the project, and therefore, could be guilty of contravening either the procurement law or the Constitution of Kenya. This is another Landmark ruling by the SCOK. The Court found that the implementing agency, the Kenya Railways Corporation, was enforcing instructions by the Executive since the acquisition of the contract was a Government- to -Government deal.