East Africa Economic Report

Wind, Solar, Geothermal, and  Hydro  the leading   sources of power Green energy sources of Power generation in Kenya have surpassed 2.4GW thus paving the way for decommissioning of Diesel powered generation. Demand for Thermal power is declining as other cheaper sources come on stream.  This process will begin in two years’ time, the President has announced. Kenya is also, self-sufficient in electric power generation in the short run. The current capacity has risen to 2351 MW against a peak demand of 1802 MW, says KPLC, the electricity distributor.  Ninety percent (or 2.4 GW) of this capacity is supplied by green sources-hydro, geothermal, wind, and Solar sources.  The spare capacity, which is a requirement in power generation, stood at 23 percent by June 31, 2018, says the power Distributor, KPLC’s in its annual report 2017/18. Since then, an additional 364 MW have been added to the grid which puts the total capacity at 2715 MW. ...

J oe Sang: Jumped ship,was arrested  A Tsunami is brewing at Kenya Pipeline Corporation. And, it will ravage many people in a wide corruption network that thrives on milking KPC, we can report. The arrest of several senior managers is just the tip of the iceberg. More arrests are expected next week if documents in our possession are anything to go by.  The paper documents the extent of sleaze and outright theft of public resources at KPC. That charges were approved and arrests made hardly a week after the sleuths officially began investigations suggests that the charges were already with the DPP. The potential arrests include senior government officials, top officials at the corporation, politicians, their relatives, friends, associates, and dummy companies.   Kenya Pipeline Company is a den of iniquity, we can report. Everything unethical takes place at the corporation with impunity- graft, theft and nepotism rule the company.  The crimes include em...

President Magufuli: Bull in a China shop Tanzania recently passed a legislation which criminalizes criticism of official statistics. The legislation drew immediate protest from The World Bank and is viewed as a major contributor to the Bank's decision to cancel a proposed $300 million in financial support to the country.  This adds to the plethora of legislation and edicts that make the country’s Policy and legal environment baffling. While the laws and edicts are issued in the name of protecting Tanzania’s interests, they appear to have the opposite effect.  Consequently, investors are leaving, others have held back their plans, proposed acquisitions have been cancelled, businesses are closing, development partners are withdrawing and her mega- projects have no takers. And, with development partners also holding back their support, trouble is brewing in the Tanzanian pot. Apart from the Laws, edicts by Ministers and provincial administrators add to the confusion. T...

President Xi Jinping and DonTrump:  Standing eyeball-to-eyeball     The USA has stoked the fires for fierce competition for Economic and Political Influence in Africa. New legislation, to be signed into Law soon, will double US Corporate investments in Africa to $60 billion. The Build Act also creates a government agency to lead the effort. The agency, International Development Finance Corporation, IDFC, will do more than its predecessor because it will buy a stake in development projects in Africa.  That makes it the pathfinder for and driver of corporate America’s entry into Africa for, by buying a stake, IDFC will oblige Corporate America, whose understanding of Africa is minimal, to take the risk and enter the continent’s development agenda. Some commentators have already placed Kenya, South Africa, Nigeria, Ghana, Zambia, and Ethiopia on the radar because they are considered low-risk countries.  These countries are also on the investment radar o...

A Prototype of Konza  ICT City: Some of Africa's ambitious projects Africa is becoming the theatre for economic giants in the East and the West to battle for domination. And because of the demonization campaign going on, we term it the battle of the Beast vs the Dragon. The beast represents the West while the dragon represents China. Africa is rising and its economic prospects brightening presenting mouthwatering opportunities for investors anywhere in the world.  These are Africa’s pluses: a young and growing population. Researchers say that by 2040, Africa will have the youngest and well-educated population anywhere in the world.  A report by Bloomberg back in 2014 said that Africa’s growing population is an asset, not a liability. Being healthy and well- educated, it forms a large pool for labour in the world and also a large market for goods. The report also said that in 2014, Africa’s growing middle class spend $1.3 trillion on consumption. It projects t...

A 14-year analysis of remittances   Remittances by Kenyans living and working abroad have risen 569 percent in the 13-year period from 2004 to 2017. They increased from US$ 338 million in 2004 to $1.9 billion in 2017, posting a massive 44 percent increase a year.  Remittances appear set to pass the US$2.5 billion mark this year if the trend recorded by Central Bank of Kenya is anything to go by.  The data shows that by the end of June this year,  remittances exceeded $1.3 billion. An analysis of the 14-year trend shows that mid-year figures are a pretty good indicator of the trend to the end of the year. Academic research and commentaries by the financial experts indicate that remittances have reduced poverty, enhanced human capital since it helps recipient households to finance education, health care, housing, small businesses, and farming. Recipients tend to put more money into these sectors than those who do not receive.  Research also indic...

KQ: Turning around, plans expansion Kenya Airways Plc  has plugged 30 per cent of its financial hole, reporting a decline in its loss in the first half of the current financial year.   Its losses stood at US$39.7 Million from $56.7 million a year ago. Further, the third largest airline in Africa plans and aggressive growth of its fleet and expand to 20 new routes in the next five years. Consequently, it plans to hire as many as 100 pilots a year over the next five years, Chief Executive Officer Sebastian Mikosz said. The carrier is facing “significant operational challenges” and needs as many as 70 additional first officers and 50 captains to operate its current fleet of 40 aircraft, along with  new aircraft  it plans to acquire, Mikosz said.  The airline, which begins direct flights to New York from Nairobi ion October 28 th , is preparing to take back five aircraft sub-leased to Oman Air Transport and Turkish Airlines from...

The Ngong Tunnel of SGR:  Could spawn Industrialization Binge  Meeting three Heads-of- state in 10 days spread across the globe! That is a tight schedule for Uhuru Kenyatta, Kenya’s President. And we would be right to ask; what’s in it for us? Plenty seems to be the answer.  Let’s start with the US where the President is meeting President Donald Trump. What’s in it for us? Economics: Trade, investment. No begging bowls. Trade and investment –Quid pro Quo. Uhuru is there to market Kenya as an investment destination for American investors – not Government and NGOs.  Kenya needs power, good roads and other infrastructure to unleash its growth potential and create jobs, reduce poverty and improve the standards of living in the country. It targets being a middle-income country (per capita income above $5000) in the near future. To achieve this, she needs investors to build industries in Kenya to put the youth to work. To attract investors, she needs enabling i...

 A hydro dam: Losing glitter Every cloud, so the saying goes, has a silver lining. That is true of the electricity generation industry in Africa. Although the continent is blessed with various sources of power generation. It is energy poor. This is because of the tragedy of poverty in the continent. Developing such sources as Hydro, which is the leading source, is expensive and slow to implement and complete.  Estimates show that the current demand for power in sub-Saharan Africa is about 100GW of which 22 percent or22GW, is supplied by hydro. This means that 78% of electricity in Africa is provided largely by thermal sources including diesel-powered generators and Coal. By 2040, electricity demand will rise to 385 GW, and Hydro will generate only 100GW of this, leaving the bulk of the demand to be supplied by other sources. Hydro, despite being a plentiful resource in Africa, is surely the bottleneck to economic progress in the continent. One of the causes for the sl...

The Pride of Africa: leading the way The Count-down has begun. We are two months away from Kenya-Airways’ direct flights to New York from Nairobi.  Save for any unforeseen occurrence, the deal is done. For Kenya, the start of Direct flights to the USA is more than just our colours on American airspace.  It is big business and means more jobs at home. A number of stakeholders are salivating over the prospects of getting a foothold on the US market.  Cut flowers exporters have all along been salivating over the US market, the largest cut-flower market in the world. However, the cost of delivering them has been a draw-back. Cut Flowers: Gunning for  10% stake in The US Now with Direct flights, the market has drawn closer to home. It is only 15 hours away! The US Cut-flower market is estimated at US$ 2.5 billion and is dominated by Colombia which controls a large chunk of it. Kenyan flowers have a tiny 0.4 percent of this humungous market and offi...

Men at work: KPLC employees  The cost of power in Kenya is unlikely to come down any time soon. And this places Kenya Power and Lighting Company between a rock and a hard place. And it is likely to remain sandwiched in that unenviable position for a long time. The bone of contention with its customers is high electricity cost. This is a paradox: Kenyans are protesting high electricity bills at a time when more Green energy is coming live on the national grid in droves. The total combined output of Hydro and geothermal power is expected to rise to 2,339.9 MW in a country whose peak demand is 1775 MW. So where is the problem? Is it taxes, corruption, inefficiency, or the billing policy?  It could be a bit of all these plus the Power Purchase Agreements signed with thermal energy producers. The IPPs signed a 20 year Power Purchase Agreements with KPLC. Three of the IPPs with a total capacity of 225MW  have relatively new PPAs, being less than 10 years old. I...