Capital FM

Posted Tuesday, March 9 2010 at 12:44

BY EVELYN NJOROGE

NAIROBI, Kenya, Mar 8 - Citadel Capital, the Egyptian private equity firm has said it plans to overhaul the Kenya Uganda railway line and have it operating efficiently in the next two years.
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Managing Director of Africa and Middle East Karim Sadek told Capital Business that they plan to start rehabilitating the 2,350 kilometre line in sections with the Nairobi-Mombasa track getting priority.

“It has to start from the source. The first section of improvement would probably be Nairobi and we are hoping to have that done in a few months but it will be a function of our negotiations with our lenders on when to release the loan. My guess is maybe late 2010 or early 2011,” he said.

Citadel Capital confirmed its acquisition of a 49 percent shareholding in Sheltam Railways Company, which is the largest shareholder at the Rift Valley Railways late last month in a move that saw it indirectly have a 17.5 percent interest in the concessionaire.

At the time, the MD hinted that they were looking at acquiring the remaining stake at Sheltam but that now is almost a done deal. Mr Sadek explained that they are only awaiting the nod from the International Finance Corporation (IFC) so that they can assume the 100 percent control of Sheltam.

“We signed a two-tier agreement with the first part being that we have acquired 49 percent (at Sheltam) which is done and we have a conditional sale and purchase agreement with (Roy) Puffet of Sheltam for our acquisition of the remaining 51 percent. It is conditional because that is what is stipulated in the shareholder agreement of RVR and in the loan agreement with the IFC,” he explained.

He added that they had already sought the approvals from the IFC and were hoping to hear from them soon.

“We are not going to negotiate again on the 51 percent nor do a new contract. It’s one document with two parts. One is 49 percent, the other one is effective once the two conditions are met,” he emphasised.

Citadel will become the largest shareholder with three representatives to the RVR board up from the current two.

IFC, the private sector arm of the World Bank which has been involved in this project in several areas, has been leading the project financing although it has been accused of delaying funding for the revitalisation of the rail line.

The private firm has indicated its intention to inject $150million (Sh11.5b) into RVR to turn around the company. This money is expected to be generated from one third equity, one third debt and the remainder from internally generated profits.

Mr Sadek was optimistic that once the railway line was fully operational, they would break even after two years.

He added that Citadel Capital plans to ensure that RVR is well funded which would enable them to achieve their goal of having an efficient rail network for East Africa and at the same time ensure a good return on investment for their shareholders.

“We are going to work closely with the shareholders and with the lenders to start unlocking the loans which are sitting there and have not been used alongside other subsequent capital injection,” he added.

At the same time, Mr Sadek downplayed boardroom wrangles that have plagued the concessionaire since it was formed in 2006 saying it was not their plan to own 100 percent at RVR.

“Our intention is to make sure that we have enough leverage inside the company to make sure that the story of the last few years is not repeated meaning that when the company needs funds, there’s a capital called on and the funds come in,” he said adding that they had consulted all the shareholders who had agreed to work together to ensure the success of the firm.

Currently, Trans-Century has a 20 percent shareholding in RVR while Prime Fuels of Kenya holds a 15 percent stake. Centum Investments Kenya, Tanzanian Mirambo Holdings and Australia’s Babcock and Brown each own a 10 percent share.

Capital News

BY SARAH WAMBUI

NAIROBI, Kenya, Mar 8 - Prime Minister Raila Odinga has maintained that politicians and leaders implicated in corruption must be held to account for the government’s war against graft to succeed.

Mr Odinga on Monday told an International Monetary Fund forum on Africa’s Economic transformation that corruption had been the biggest impediment to development.

The Premier who insisted that the war on corruption must not be personalised also said Kenyans should single out individuals who swindled public property for their selfish gains. The PM who last month clashed with the President over the suspension of Ministers William Ruto and Sam Ongeri over corruption allegations further added that African countries continued getting financial aid which was fraudulently lost.

“Corruption actually removes the necessary resources from public to private hands; it is committed by individual people even if they are politicians and when you point them out you are not politicising it you are fighting it. Most of the aid money finds itself into private pockets; some of it into private bank accounts in Europe and here the giver and the taker are equally guilty,” he said adding that global financiers also needed to put in place measures that would ensure money was rightly used.

Mr Odinga further observed that bad governance and tribalism were also big threats to Kenya’s economic potential as they hindered development.

“It is a paradox that the richest continent is also the poorest. Brazil was a former colony of Portugal, India was a former colony to Britain but they are way ahead of us. When we got independence Kenya’s economy was equivalent to South Korea but right now their economy is almost 46 times bigger than ours. What did they do right that we did wrong? We have the power to change this country” he said.

Nobel Laureate Professor Wangari Maathai who was also present added that financial prudence remained Africa’s biggest challenge. She cautioned Kenyans against waiting for external intervention to sort out the country’s matters saying home grown solutions would work best.

“The point I want really to emphasise and what I have experienced in my three decades of work here is that money has never really been the problem. It is not as if IMF will not give us the money. It is not as if any governments represented here will not give us the money. It is what we do with that money; it is how we spend that money and that’s the challenge that we have,” she said.

IMF Managing Director Dominique Kahn however hails efforts by African governments to address the vice saying more should be done.

“The reality at least here in Kenya is that the government is really committed to addressing this problem and that is also something totally new. Not so many people have been convicted yet but the change is enormous,” he said.

Bob Geldof an international political activist known for his anti poverty campaigns in Africa also asked African governments to increase their anti corruption efforts and also challenged African countries to rise up and reach their economic potentials.

“We all want our turn to eat but we don’t have to gorge ourselves ladies and gentlemen; we don’t have to get fat and stuff ourselves so we no longer think clearly. There is enough to go around and when we rob a country for personal gain we commit the greatest theft against a nation’s future destiny. And that is why corruption is such a hideous, despicable and abominable thing,“ he said.

Mr Odinga also said ethnicity had led to the unfair distribution of resources terming it ‘the disease of the elite’. He said it divided the country and equally hindered the nation’s development.

“The elite in competition for resources usually resort to ethnicity to discriminate against their fellow country men and this has been in this country from regime to regime and it is a big enemy to the people of this country. The real Kenya will not emerge until we have dealt with it as well as corruption,” he said.

The PM also noted that Africa had survived the global recession however adding that remittances from the Diaspora into Kenya had declined and that trade and investment opportunities had also been affected.

“It had been reasoned that the crisis would be confined to the developed countries whose economies were intertwined financially; that Africa would be insulated from this. But this of course turned out very wrong. It is said that when the United States sneezes, Europe catches a cold, Asia develops influenza and Africa gets TB or HIV/AIDS and that is how it actually turned out,” he said.

Capital News

Posted Tuesday, March 9 2010 at 08:19

REBECCA NDUKU

BY SARAH WAMBUI

NAIROBI, Kenya, March 8 - The government says Kenya will prioritise trade and investment as part of its economic recovery plan after the global meltdown.

At a forum where the International Monetary Fund engaged Kenyan leaders on economic matters and the effects of the global recession, it was noted that Africa’s recovery was so far commendable but more needed to be done.

Prime Minister Raila Odinga who spoke at the forum on Monday said external financial aid should be directed towards improving infrastructure to enable the country and the continent remain independent.

He said time had come for the continent to start relying on its resources and increase its sovereignty.

“We are trying to open up our economies through massive investment in infrastructure but our economies are still too weak to attract financing from the international financial market which is why we need aid. But ultimately, it is more trade and the access of our goods to the international market which is very crucial,” he said.

Finance Minister Uhuru Kenyatta on his part said African governments should change focus from the west and explore possible inter-trade relations. He emphasised the opening up of regional markets as a means of boosting the continent’s economic strength.

“We need to looking at ourselves and comparing ourselves with being giants where real giants play and that’s not going to happen unless we focus ourselves on regional integration. With regional integration it means a great deal more emphasis on regional infrastructure. The trade must not only be trade with the developed countries but trade with ourselves- within the African context,” he said.

IMF Managing Director Dominique Strauss-Kahn however challenged African governments to look within as opposed to reaching out to donors. He said poverty had flourished because African countries had for long been reduced to fixing disasters.

“I’m afraid that what we have been doing so far was just not enough; just coping with the immediate problem and looking forward to reaching the level of middle income economies is perfectly normal. But we need to look further and it won’t happen by relying solely on foreign aid,” he said.

The IMF chief who lauded Africa for coping through the challenges of the global recession however warned that the continent might not be able to recover from the effects posed by climate change. He said the threat posed by climatic changes was so great that the continent needed to put in place measures to cushion it from the effects.

“Certainly it is not the time to rest. Africa remains highly vulnerable to economic dislocation. Africa will continue to face large, consistent and costly shocks and those shocks have not only to do with economic stability. I speak to you this morning with a sense of urgency; unfortunately climate change will hit developing incomes soonest and hardest and we need urgent action,” he said.

The Finance Minister also added that subsidies given by international trading partners were a hindrance to trade for African countries as they promoted unfair competition. He asked the international community to promote the development of free and open trade saying it would provide an equal playing ground for developing countries.

“We have suffered as a continent not so much as a result of the subsidies that we give because we cannot afford subsidies. But I think Africa has suffered as a result of the subsidies that developed countries give their own farmers; cotton farmers and sugar farmers. If we were allowed to compete in a completely free world I honestly believe that Kenya and Africa do not need aid but we can actually stand on our own two feet,” he said.

Mr Kahn also explained that the IMF would keep in check business between China and African countries saying to ensure the super power did not take advantage of the developing African countries.

“It is very useful that a country having a lot of resources may help Africa. The only problem is that the deals between China and African countries have to be fair deals. When you are small and are dealing with a big animal then you have to have a long spoon and try to look at what is really at stake,” he said.

Mr Kenyatta also asked African countries to develop their human capacities saying that other than mineral resources, Africa’s human capacity was their greatest asset.

“Our ability to merge our mineral resources and the human capacity with the opportunities that we have prevail upon on our people- especially the young to take advantage of the networks that have been built to be able to deal with the rest of the world. We need to take advantage of these opportunities,” he said.

Other issues that were discussed at the forum were tribalism and ethnicity and corruption.

Friday, 26th February 2010

By Boniface Ongeri
and Adow Jubat

Initially
shunned as a burden on the host communities, Somali refugees have become
an integral part of the economy of urban regions of North Eastern
Province.

The headquarters of
the province, Garissa and its sister towns of Wajir, Mandera and Ijara
appear to have embraced and learnt to live with the immigrants, cast on
them by the 20-year long breakdown of order in Somalia.

Refugees in the Northern Kenya camps always yearn for a better life outside. Many have managed to immigrate or become residents in Kenya. [PHOTOS: FILE/STANDARD]

In the mid-nineties, local populations and the
Provincial Administration were always at loggerheads with the refugees
whose numbers surged by the day. Today, most of the refugees who sneaked
into the towns and managed to get residency or citizenship status have
integrated into the communities.

Welcoming the refugees has become like an investment whose
returns have matured.

The
United Nations High Commission for Refugees (UNHCR) says there are about
400,000 Somali refugees registered with the agency to live in Kakuma
and Dadaab refugee camps in Garissa and Turkana districts respectively.

Citizenship

But other NGOs and the Provincial Administration say over half
of those have already found their way into the population by obtaining
citizenship, mostly through corrupt means.

“Since the laws restricts refugee movement outside
camps, thousands have over the years sneaked out of the squalid living
conditions in the camps to integrate with their hosts. Many have thrived
in business and become residents of North Eastern Province’s towns,”
says a director of a Wajir-based NGO.

The exodus from the camps intensified in the past few years as
the situation in Somalia degenerated and as the US and European nations
tightened immigration rules on asylum seekers.

Ibrahim Rashid Ahmed, an economist and development
analyst says, with hope for peace in Somalia a mirage, many refugees
took the predicament in their stride and started a new life.

Subsequently, the Somali refugees have
contributed to turning the once sleepy North Eastern Province towns of
Ijara, Garissa, Wajir and Mandera into bubbling business hubs.

The towns have virtually shed off their baadiya
(Somali for hinterland) image and embraced an economic transformation
spurred by enterprising immigrant business people.

Garissa, which was until 2005 served only three
bus companies, now has more than 15, making travel easier, reliable and
cost effective. The immigrants own most of the companies.

The immigrants also run most of the businesses
and are a source of employment opportunities for thousands of locals.

They own well stocked bazaars, dealing mainly in
electronics, textiless and food items.

One can now buy a 40-inch flat screen TV, a Compaq computer and
a Mac laptop in Garissa.

Similar
thriving business has taken root in the border town of Mandera, Ijara
and Wajir.

“Most of the goods
come in from Somalia. Some are taken through the Customs desk at Mandera
but majority are smuggled through unpoliced border routes,” said a
Mandera shopkeeper.

“The
immigrant businesspeople have built strong business partnerships with
their hosts, many who provide a front when business owner’s status is
not regularlised.

Garissa now
has branches of seven major banks, up from two the years ago.
Fast-growing Equity Bank has opened branches in Garissa, Wajir and
Mandera.

Hassan Mohammed, a
Somali immigrant with a niche in real estate said he employs more than
500 people.

He has spread out
his businesses to Nairobi and is in the process of constructing
high-rise offices and business complexes in the sprawling Eastleigh.

However, Mohammed says most immigrants operate in
fear of arrest by police. “Those who have work permits or resident
status face a lot of problems,” says the businessman.

He denies that many of the immigrant Somali
businesspeople are beneficiaries the latest surge of piracy.

“Most of it is a myth, I have never seen a former
pirate here in Garissa, maybe they invest elsewhere,” says Mohammed.

According to Kenya Chamber of Commerce and
Industry Wajir Branch Chairman Mohammed Abdille Ali the real story of
the Somali refugees-turned-businesspeople is tainted by unfounded
allegations.

“While it is
undisputed that some have had negative influence, the immigrant Somalis
have generally contributed positively to the economy,” he said.

Helping aliens

North Eastern Provincial Commissioner James Ole Seriani says
some residents and Government officials front for the aliens as their
Kenyan relatives after receiving bribes.

“It is difficult to pin down a foreigner who has
Kenyan documentation,” he says.

“When
the foreigners are registered the same residents who helped them
acquire documentation shout the loudest on realising the immigrants are
giving them competition for jobs, businesses and property rights. We
have managed to take action against some chiefs who have been caught
helping aliens as emanating from their locations in order to give them
registration documents,” Seriani says.

Emerging-market sovereign debt

The new problem with Asian sovereign debt—scarcity

Feb 25th 2010 | HONG KONG | From The Economist print edition

ELEVEN months ago Indonesia’s government paid almost 12% to raise long-term money on the international capital markets, while America was financing its own debt for less than 3%. By early January the rate on America’s debt had climbed a bit, but Indonesia’s financing costs had plunged to a shade under 6%.

This remarkable shift in financing costs is not unique to Indonesia. The Philippine government issued a dollar-based bond in January carrying an interest rate of 5.7%. A year earlier, its outstanding bonds carried an effective rate of 8.4%. Malaysia and South Korea are also rumoured to be in the market for debt, and in sharp contrast to some rich-world issues, the buyers are likely to be at least as eager as the sellers.

Nor is investor enthusiasm confined to Asia. Yields on emerging-market sovereign debt globally are approaching all-time lows (see chart). According to Fernando Garrido, who co-ordinates public-debt operations at Brazil’s Treasury, the past three auctions of ten-year bonds have attracted record demand. Foreign ownership of Brazil’s domestic bonds reached its highest-ever level in January, he says.

A large part of emerging markets’ appeal lies in the structure of countries’ balance-sheets. In Asia, a combination of debt forgiveness, fast growth and restraint in government spending has helped the debt-to-GDP ratio contract sharply in almost every country since 2001. According to Standard & Poor’s (S&P), a ratings agency, Indonesian public debt has dropped from 65% of GDP in 2001 to less than 30% now.

There are exceptions to this rosy picture, the obvious one being Asia’s most developed market, Japan, whose gross public debt is almost 200% of GDP. Malaysia and Vietnam have seen rising debt stocks, too. In neither case is their debt-to-GDP ratio particularly high—less than 50% for Malaysia and below 30% for Vietnam—but any increase in this ratio could prompt a re-evaluation, particularly for Vietnam, which also suffers from high inflation and a weak banking sector.

Still, it is hard to underestimate the appeal of expanding economies, particularly in the current environment. That has prompted a scramble for Asian securities, revealing another large shift to have taken place over the past decade. Since the 1997-98 Asian financial crisis, when falling currencies made it much more expensive to pay off foreign creditors, many emerging markets have been careful to raise funds for sovereign debt locally. The amounts they raise on global capital markets are pretty trivial: less than 2% of South Korean and Singaporean government debt is denominated in foreign currency, for example. “The impact of that scarcity is substantial,” says Ronan McCullough, head of debt syndication for Asia at Morgan Stanley, an investment bank. Unlike European and American sovereign debt, which is all too available, Asian debt commands favourable prices in part because it is rare.

It is possible for outside investors to buy Asian debt locally, but it is not easy. Some countries apply withholding taxes. There is little liquidity. And buying sovereign debt locally inevitably means taking on currency risk. There are, however, compensating factors. Yields on sovereign debt issued within Indonesia, the Philippines and other Asian countries are significantly higher than yields on dollar-based bonds. Governments are willing to bear these higher costs to avoid the kind of dumping and capital flight that took place during the Asian crisis, but it is curious that local investors require more compensation than international investors. Perhaps their closeness to the market gives them an insight international punters lack?

Feb 25th 2010 | HONG KONG | From The Economist print edition

THE idea that the world’s economic centre of gravity is moving eastward is not new. But the global financial crisis, many argue, has given the shift in economic power from America and western Europe to Asia a big shove. Emerging Asia rebounded from recession much faster than the developed world; its banking systems and debt dynamics (see article) are much healthier. In 2009 China overtook Germany to become the world’s biggest exporter. On one measure it now looks likely to become the world’s biggest economy within ten years. But just how far has power really tilted towards Asia?

The region has certainly become more important to bankers and businessmen, accounting for a record share of many companies’ profits last year. Several senior executives have relocated to Asia, the latest being HSBC’s chief executive, Michael Geoghegan, who officially moved from London to Hong Kong on February 1st. Since 1995 Asia’s real GDP (even including less sprightly Japan) has grown more than twice as fast as that of America or western Europe. Morgan Stanley forecasts that it will grow by an average of 7% this year and next, compared with 3% for America and 1.2% for western Europe.

Yet a closer look at the figures suggests that the shift in economic power from West to East can be exaggerated. Thanks partly to falling currencies, Asia’s total share of world GDP (in nominal terms at market exchange rates) has actually slipped, from 29% in 1995 to 27% last year (see chart 1). In 2009 Asia’s total GDP exceeded America’s but was still slightly smaller than western Europe’s (although it could overtake the latter this year). To put it another way, the output of the rich West is still almost twice as big as that of the East.

As for the popular belief that Asian producers are grabbing an ever-larger slice of exports, the region’s 31% share of world exports last year was not much higher than in 1995 (28%) and remains smaller than western Europe’s. Indeed, the shift towards Asia appears to have slowed, not quickened. Its share of world output and exports surged during the 1980s and early 1990s. Although China’s share has grown since then, this has been largely offset by the decline in Japan, whose share of output and exports has halved.

What about Asia’s financial muscle? Asian stockmarkets account for 34% of global market capitalisation, ahead of both America (33%) and Europe (27%). Asian central banks also hold two-thirds of all foreign-exchange reserves. That sounds impressive, but their influence over global financial markets is more modest, because official reserves account for only around 5% of the world’s total stash of financial assets. The bulk of private-sector wealth still lies in the West. The fact that Asian currencies make up only 3% of total foreign-exchange reserves indicates how far Asia still lags in financial matters.

The “rise of Asia” is no myth, however. GDP figures converted at market exchange rates understate Asia’s real expansion. Many currencies tumbled during the Asian financial crisis in the late 1990s, slashing the dollar value of their economies. Japan’s nominal GDP has been squeezed by deflation. More importantly, prices of many domestic products, from housing to haircuts, are always cheaper in low-income countries, implying that households’ real spending power is bigger.

If GDP is instead measured at purchasing-power parity (PPP) to take account of these lower prices, Asia’s share of the world economy has risen more steadily, from 18% in 1980 to 27% in 1995 and 34% in 2009. By this gauge, Asia’s economy will probably exceed the combined sum of America’s and Europe’s within four years. In PPP terms, three of the world’s four biggest economies (China, Japan and India) are already in Asia, and Asia has accounted for half of the world’s GDP growth over the past decade.

Some economists claim that PPP measures exaggerate Asia’s economic clout. What really matters to Western firms is consumer spending in plain dollar terms. Although over three-fifths of the world’s population live in Asia, they only account for just over one-fifth of global private consumption, much less than America’s 30% share. But official figures almost certainly understate consumer spending in emerging Asia, because of the poor statistical coverage of spending on services. Figures from the Economist Intelligence Unit, a sister company of The Economist, suggest that Asia accounts for around one-third of world retail sales. Asia is now the biggest market for many products, accounting for 35% of all car sales last year and 43% of mobile phones. Asia guzzles 35% of the world’s energy, up from 26% in 1995. It has accounted for two-thirds of the increase in world energy demand since 2000.

Many Western firms are more interested in Asia’s capital spending than its consumption, and here Asia is undoubtedly the giant. In 2009, 40% of global investment (at market exchange rates) took place in Asia, as much as in America and Europe combined. In finance, Asian firms launched eight of the ten biggest initial public offerings (IPOs) in 2009 and more than twice as much capital was raised through IPOs in China and Hong Kong last year as in America.

Winston Churchill once said: “The longer you can look back, the farther you can look forward.” The new economic order is in fact a resurgence of a very old one. Asia accounted for over half of world output for 18 of the past 20 centuries (see chart 2). And its importance will only increase in the coming years. Rich countries’ growth rates are likely to be squeezed over the next decade as huge household debts dampen spending, and soaring government debt and higher taxes blunt incentives to work and invest. In contrast, growth in emerging Asia (almost four-fifths of the region’s total output) is likely to remain strong. Robust growth should also give governments in emerging Asian economies the confidence to let their currencies rise, which would further boost the relative size of their economies in dollar terms.

By 2020 Asia could well produce half of some big Western multinationals’ sales and profits, up from a typical proportion of 20-25% today. Asian staff eagerly await the day when they can fix the times for international conference calls, so Europeans and Americans have to put up with after-midnight discussions with the Beijing office. That may be the best test of whether economic power has really shifted east.

By Beauttah Omanga

Kenya entered the final stretch of its long journey in the quest for a new constitution when the Committee of Experts presented a final draft that could drastically change the political terrain.

For starters, Cabinet ministers will no longer be picked from Parliament if the proposed new constitution is passed by Parliament. This is contrary to the recommendations by the Parliamentary Select Committee (PSC) on Constitutional Review that had given the President the leeway to pick Cabinet members from among MPs.

The country will adopt a pure presidential system of Government in the draft handed to PSC yesterday by CoE. The final draft did not give judges a reprieve as they would have to be vetted.

Although minor changes were made on the draft, some of the changes have far-reaching implications. For example, the final draft proposes a powerful senate with constitutional teeth as originally contained in the Bomas Draft Constitution.

CoE Chairman Nzamba Kitonga said: “Constitutional Reform in Kenya is not an event but a historical process whose bedrock is the people of Kenya and their elected leadership.”

Focus now shifts to Parliament, which will be expected to midwife the delivery of the new law to a referendum.

The fresh proposals of laws come with checks and balances in which Parliament vets all constitutional presidential appointees.

It also provides for the impeachment of the President. “We have done our part and now look forward to you as PSC to rally MPs for this cause,” said Kitonga.

He said the eyes of all Kenyans were now focused on the PSC, which was expected to skillfully navigate the proposed constitution through what he termed “the rough seas of Parliament”.

House cautioned

He cautioned the Tenth Parliament against letting Kenyans down, as did the previous Parliament saying the latter mistook constitution making for an arena for belligerent political forces to battle for supremacy.

“That yielded to the catastrophic events evidenced in the post- election violence,” he said.

PSC Chairman Abdikadir Mohammed assured the experts the august House would raise to the occasion and meet the high public expectations. On representation, the experts recommended that some of seats in the senate be reserved for people with disabilities and youth who will be allowed to have their constituencies outside political parties.

The CoE removed a ceiling arrived at by the PSC during the Naivasha retreat that put the total number of constituencies for both National Assembly and the senate at 418. “Although we have removed the requirement that this be a maximum, you are still at liberty to revisit the subject,” said Kitonga.

The experts, however, dealt a blow to the leaders who were advocating for an increase of counties as they resolved to retain the 47 as PSC proposed.

“It is important for the public and leaders to understand that these counties have been created on the basis of the only existing legal criteria which is the District and Provinces Act,” said Kitonga.

Speaking during the ceremony at County Hall, he said that engineering of the senate provided unique challenges. He recalled that the PSC had proposed that the senate be accorded limited mandate.

He disagreed with the PSC saying the changes radically altered the structure of the senate envisaged since Bomas, adding, “but even more fundamentally, it somersaulted the people’s historical vision of a senate”.

The experts cautioned that without a well-structured senate, the pure presidential system would rest on a shaky foundation in the absence of a critical checks and balances.

Thursday
February 25,  2010

By OLIVER MATHENGE                         Posted Wednesday, February 24 2010 at 19:43

Kenya inched closer to a referendum on a new constitution when the Committee of Experts presented the final version to the Parliamentary Select Committee.

The experts reversed some of the decisions arrived at by the MPs team that reviewed the draft law in Naivasha last month.

The final version must now be tabled in Parliament by March 7 for approval or amendments, leading to a referendum in July.

In their final draft presented to the PSC yesterday, the Committee of Experts (CoE) reinstated several clauses the MPs had expunged from the draft.

The experts re-introduced sections of the Bill of Rights, enhanced the role of the Senate, removed assistant ministers and added the requirement that the president seeks parliamentary approval on all appointments other than those of judges.

“We have in the last 21 days been crafting the proposed constitution in a manner that enables us to capture your input without sacrificing the views of ordinary Kenyans. Constitutional reform is not an event but a historical process, whose bedrock are the people of Kenya and their elected leadership,” CoE chairman Nzamba Kitonga told the PSC during the handing over ceremony.

Kenyans will go for a single election on the second Tuesday of August of the election year if the draft sails through Parliament and passes the referendum test. The PSC had proposed that the presidential and parliamentary elections be held separately.

While the PSC draft did not require the president to seek parliamentary approval on major appointments, the new draft indicates that the president nominates then awaits parliamentary approval.

However, in the Judiciary, only the chief justice and his or her deputy will require approval from Parliament.

The Judicial Service Commission will nominate candidates to serve as judges, who will be appointed by the president, with MPs playing no role.

“The committee is of the view that this method of appointment does not only enhance the principle of separation of powers but it also insulates the Judiciary from political horse-trading and ethnic balancing considerations,” Mr Kitonga said.

The CoE’s final draft, however, gives the president exclusive authority to dismiss public officers without seeking the approval of Parliament. But in the case of the Judiciary, the dismissal will have to come from a tribunal.

In the new Executive structure proposed by the CoE, there will be no assistant ministers as “this would result in a bloated government, contrary to the wishes of Kenyans”.

The new Cabinet will have 14 to 22 secretaries (new reference for ministers), who will not be MPs and who will be assisted by principal secretaries.
On the Senate, the CoE enhanced its structure, giving it legislative powers and a role in the impeachment of the president.

On impeachment, the National Assembly will introduce the motion but investigations and approval of the impeachment will lie with the Senate.

In Naivasha, the PSC indicated in their revised draft that the Senate is the lower house with limited legislative role. But the CoE said that this would make the proposed presidential system “shaky” due to the lack of proper checks and balances.

“Without a structured Senate the pure presidential system would rest on a shaky foundation in terms of the absence of a critical check and balance. We have, therefore, recommended the retention of the Senate with some restricted legislative authority and as the trial chamber for the impeachment of the president and the vice-president,” Mr Kitonga told the MPs in his address.

The CoE also said in a report accompanying the draft that it was important to exclude the Judiciary from the impeachment process as it is a political trial and it may be required as an avenue of appeal.

On the Bill of Rights, the experts re-introduced the economic and social rights and the right of all Kenyans to have access to information.

They also reinstated the rights of children and those of marginalised and vulnerable groups.

“The right to information is intimately linked to accountability. It is the means by which citizens hold the State accountable,” the CoE report says.

The experts have retained the clause stating that life starts at conception but explain in their report that this contravenes the clause on the freedom of conscience, religion, belief and opinion.

They also indicate that the language used in the constitution on abortion “should not outlaw methods of fertility control such as emergency contraception”.

Article 26(4) of the new draft now says: “Abortion is not permitted unless, in the opinion of a trained health professional, there is need for emergency treatment, or the life or health of the mother is in danger, or if permitted by any other written law.”

Devolution

On devolution, the experts enhanced the structure of the county executive committee by giving the governors and deputy governors executive authority.

The two will be elected directly during the elections and can only be removed through impeachment and not by a vote of no confidence.

The experts upheld the proposal by the PSC that the Administration and regular police fall under one command – the Inspector-General. This head of the force will have two deputies, each in charge of one of the units.

By GATONYE   GATHURA Posted Wednesday, February 24 2010 at 22:16

Kenya is set to harvest the biggest short rains maize crop in a decade. The harvest should be in by early March and it is expected that it should feed Kenyans until May, even without any significant imports.

At least 300,000 metric tonnes, nearly 40 per cent higher than production in a normal year, are expected. This is the first time, since the el Nino rains of 1998, that such a yield has been achieved, according to the latest Kenya Food Security Update.

“In addition to good rains, the high output is attributed to supply of relief seed and fertiliser to poor farmers, which led to a 20 per cent increase in the area under cultivation, and a 40 per cent decline in the cost of fertiliser,” says the report prepared jointly by the government, the World Food Programme, and USAid.

The government is in the process of renewing the waiver on duties levied on maize imports that expired in December in order to bring in stocks to cover the probable shortfall in domestic supply after May.

The yield could have been even better, though, were it not for a dry spell at the end of November through the third week of December, which reduced crop output in parts of Kitui, Makueni, Mwingi, Kilifi, and Malindi districts.

Indications are that the subsequent replanted crop is unlikely to mature as it is at the tasseling stage and rains have ended in most of the areas. Despite the good news, a significant number of Kenyans are still going hungry because of two main reasons.

First, although the cost of maize is falling, it is still too high for the urban poor and, second, some five districts in northern Kenya did not get enough rainfall and continue to depend on relief food.