Kenya’s export of 200,000 barrels of crude oil to China, last month and the expected launch of Lamu Port underlines the country’s determination to take advantage of the stable market conditions.
This is in sharp contrast to Uganda whose contest with the Tullow Oil has not only affected operations at the Hoima Oil field but also the planned construction of crude oil pipeline to transport the commodity through Tanzania.
Tullow Oil, Total and the Chinese oil firm China National Offshore Oil Corporation (CNOOC) disagreement with the Uganda Revenue Authority (URA) has bolstered some Kenyan officials’ hopes that Uganda might be lured back on the negotiations table to build a joint crude oil pipeline to Lamu.
But whether these hopes are realised or not, Kenya would be best advised to continue on its current course that will see it exploit its full oil potential by creating a conducive environment for private investors in the sector.
Hopefully, this will lead to the discovery of more crude oil in different parts of the country as the surveys indicate. This will ultimately lead to more revenues for the country than attempting to squeeze as much money from one or two firms at the initial stage.
Encouraging investors in the oil industry should not be at the expense of the host community, national interest or the environment. As experience elsewhere has demonstrated, this is a recipe for civil unrest and destruction.
This is why there are concerns that the Government is not moving fast enough to build the capacity of Kenyans to not only run the bulk of the industry’s operations but also to audit the firms on a daily basis because oil companies have a dubious history in much of the world.
The result is that the only countries that seem to benefit from a surfeit of oil revenues are those that monitor the oil firms’ operations closely to ensure all the parties get their rightful shares.
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The nationals’ responsibility to their country begins early during the negotiations that lead to the granting of exploration agreements.
This is where the country should ensure it is represented by the best minds available even if it means the hiring of reputable negotiators from outside the country.
But signing an equitable agreement should never be seen as an end in itself, but as a means to achieve the desired results. This will only be realised when those expected to protect their national interests do their work as expected. The hiring and training should also be done on merit and staff well remunerated.
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Tanzania’s earnings from agencies cause disquiet among EAC partners
The East African Community needs to address the disproportionate gains that Tanzania gets from hosting most of the trading bloc’s agencies, particularly Dar es Salaam’s 73 per cent earnings from the $31.5 million annual average budget of the organs.
All EAC partner states contribute equally to the bloc’s budget through annual subscriptions.
A new report by the EAC secretariat has revealed that Tanzania earns $23 million from hosting five of the eight EAC organs, much more than Kenya, which earns $4 million, Uganda $3 million, Rwanda $1 million, and Burundi which receives $500,000.
The report, however, notes that Kenya gains the most from trade within the EAC, earning $38 million annually, followed by Uganda ($22 million) and Tanzania ($15 million).
Rwanda, Burundi and South Sudan make net losses from trading with the region, according to the draft report titled Equitable Sharing of Benefits and Costs of EAC Integration Process.
“Given the current reality and lessons from the former EAC community, which collapsed mainly as a result of unequal share of benefits, there is a need to share the costs and benefits in a fair and equitable manner for sustainability of the EAC Community which generates far more benefits than the costs,” states the draft report.
It further states that provisions in the EAC Treaty such as equal contribution to the EAC budget “may no longer be sustainable given the huge differences in population size and GDP of partner states”.
The draft report, which is yet to be approved and adopted, proposes a review of the formulae for equitable sharing of costs and benefits.
Tanzania’s benefits from the five organs that it hosts come from local employment, rent income and supplies. The five are the secretariat, the East African Court of Justice, the East African Legislative Assembly, the East African Kiswahili Commission, and the Competition Authority.
Uganda hosts the East African Development Bank, the Lake Victoria Fisheries Organisation, the Inter University Council of East Africa, and the Safety Oversight Agency.
Kenya hosts the Lake Victoria Basin Commission, Rwanda the East African Science and Technology Commission and Burundi hosts the EAC Health Research Commission.
The study was commissioned after the EAC Council of Ministers at its 18th meeting held in Arusha on September 4, 2009, observed that to actualise the fundamental and operational principles of the EAC required equitable distribution of benefits accruing to or to be derived from operation of the Community.
The EAC secretariat, in an interview on Friday, insisted that the draft report is yet to be finalised and could not therefore publicly discuss its findings.
“This [the earnings by Tanzania] is the percentage of gains from hosting EAC organs and institutions only. It does not include gains from trade where Kenya benefits most,” said Aime Uwase, the EAC principal planning and research officer in a response.
Further studies are ongoing to quantify other benefits from hosting and implementing various protocol provisions under the Customs Union and the Common Market, according to Wilberforce Mariki of the EAC secretariat.
The EAC, initially made up of Tanzania, Kenya and Uganda, broke up in 1977 after the then-socialist Tanzania complained that capitalist Kenya was benefiting more than the other two partners.
Other issues that caused the collapse included Kenya’s demand for more seats than Uganda and Tanzania in decision-making organs, and disagreements with Ugandan dictator Idi Amin who demanded that Tanzania as a member state of the EAC should not harbour forces fighting to topple his government.
The disparate economic systems of socialism in Tanzania and capitalism in Kenya also contributed to the fall.
Kenya had a more developed manufacturing sector than Tanzania and Uganda, resulting in large income transfers from Dar es Salaam and Kampala.
The report observes that regional integration, by its very nature, creates imbalances in gains if partner states do not take effective measures to maximise the prospective and potential benefits and minimise costs.
The overall objective of the study was to assess whether there is equitable sharing of costs and benefits of the EAC integration so far, and provide a remedial mechanism where possible.
The study suggested that EAC institutions and organs allocate jobs equitably and sustainably as per the Treaty provisions as integration deepens.
The study also suggested that job distribution should be proportional to partner states’ contribution to the EAC budget.
High profile and technical jobs should be competitively awarded, and others should be rotational and allocated on a quota basis.
The study suggests a review of the current system of equal contribution to the EAC budget by partner states, given that they are structurally different in terms of GDP, imports, exports to the region and population.
It suggests that partner states can contribute based on their capacity to pay as represented by GDP. This mode of financing has been successfully used by the Southern African Development Community, the African Union, the Caribbean and Pacific Group of States, and the Organization of American States.
Partner states with bigger economies and population are seen to benefit more, or the impact of integration could be higher in bigger economies than smaller ones. But sharing costs based on GDP remains a parameter that relatively satisfies the principle of solidarity, equity, balance and mutual benefit.
The partner states’ contribution to the 2018/19 total budget was $56,245,162 (56 per cent of the total budget) through the respective ministries of EAC Affairs ($50,227,920), the ministries responsible for education ($4,466,210) and ministries responsible for fisheries ($1,551,032).
Development partners will contribute $42,925,613 to the budget, and member universities will give $333,970. The miscellaneous revenue is pegged at $265,971.
The percentage contribution to the budget by EAC partner states has been increasing over time. It increased from 10 per cent in 2011/12 to 56 per cent in 2018/19.
The analysis of contribution per capita shows a big gap, from $0.94 (Burundi) to $0.19 (Tanzania).
As a result of reforms, trade within the EAC has increased. Intra-EAC trade was $1.7 billion in 2005, rising to $3.5 billion in 2013 and falling to $2.4 billion in 2017.
The report says the shrinking of trade among partner states since 2015 may be as a result of national production patterns becoming more similar, and movement of capital investments where products are manufactured locally.
The EAC intra-trade share is below 20 per cent, compared with the EU where it is 61.7 per cent. Among the members of the North American Free Trade Agreement, the share is 50.3 per cent and 24.3 per cent within the Association of Southeast Asian Nations.
The elimination of tariffs on intra-EAC trade led to an average annual loss of Customs duty of $1,689.07 million between 2013 and 2017.
Blows exchanged as man finds wife in bed with businessman ▷ Kenya News
A businessman from Ukambani identified as Kimeu escaped death by a whisker after he was cornered while ‘drinking water from his neighbour’s cistern’.
The husband of the woman he was munching, landed on him in unprecedented, furry filled assault-style.
He said he had for long been hunting for the man that he claimed ‘has made his bae lose interest in him’.
The suspect would arrive at the woman’s house after 10pm while her hubby was away. He works with an NGO within Ukambani.
Throughout this time, there were whispers that the two were having a good time though they tried to keep it secret.
After unsuccessfully trying to ambush the duo, the aggrieved husband sought the services of native doctor Mwikali Kilonzo to help burst them.
Days later, while in the city, he received several calls from neighbours informing him that his wife and the stranger were stuck while doing the unthinkable on their matrimonial bed.
He swiftly set off to his home and it took him four hours to arrive.
“I thought this was just hearsay, I shouldn’t have trusted you in the first place, even after giving you everything you wanted…you have the courage to bring another man in my house?” The NGO man fumed as he descended on them.
He rained kicks and blows on the young man in rapid succession as the ‘thief’ pleaded for sympathy.
The fight was quelled after the security personnel from the nearby police camp intervened.
The show was in no way different from the several other instances of cheating spouses ending up glued together during adulterous missions.
The two were later separated from agony and the man has since summoned his in-laws to discuss the matter.
Apart from netting cheating partners and bring peace in troubled homes, herbalist Mwikali Kilonzo has unique means to influence promotion at work and can spin court cases.
Additionally, she has powerful medicine that can cushion homes from spiritual and physical attacks. She is able to paralyse thieves and recover stolen items.
Contact her on 0722901790 and find a solution for your problem.
She is available in Mbitini Kitui county, Bungoma Town, Kitale and Kenyatta Market in Nairobi.
Why Kenyan men are travelling long distance to meet this woman | Tuko TV.
Kenya losing African export markets to China as manufacturing shrinks : The Standard
Export of manufactured goods has declined sharply, with Kenya losing its African export market to China and India.
In the last eight years to 2018, the country has watched helplessly as the market for some its key products including textile, glassware, cement, wood and carbon dioxide shrunk leading to massive job losses.
Struggling cement industry has seriously affected export earnings of the product which dropped by 80 per cent to Sh1.5 billion in 2018 from Sh7.5 billion eight years ago.
Cement manufacturers have been struggling with some of the companies downsizing in response to a turbulent environment. For instance, ARM Cement was placed under receivership then sold to Devki Steel when it fell into financial trouble. East African Portland Cement Company recently sent home most of its workers as it struggled to remain afloat as the cement industry faced headwinds with the slowdown in the construction sector.
Export of wood products has also suffered, plunging 65 per cent with the country earning Sh225 million a drop-down from Sh648 million earned in 2010.
Other manufactured goods that have been hit include export of textile yarns and made-up textiles, a low-lying fruit under President Uhuru Kenyatta’s job creation ambition, which fell by a third.
And with some glass-making companies shifting base to neighbouring countries, export of glassware reduced by half with the country getting Sh927 million from Sh1.9 trillion eight years ago.
Export of machinery and transport equipment, aluminium and metal containers have also shrunk as the country continues to lose its competitiveness in manufacturing. Manufacturing sector’s contribution to the economy or gross domestic product has dropped from 10 per cent in 2010 to 7.7 per cent last year.
As a result, Kenya’s export market in the East African region and Comesa, dropped as countries in the trading blocs either found ways to manufacture their products or new trading partners such as China and India that are more competitive than Kenya. Even as exports to African countries have declined, imports have increased with Kenya’s trade surplus narrowing.
Uganda, for example, has seen its exports to Kenya rise nearly three-fold to Sh49.4 billion in 2018 compared to Sh19.3 billion in 2016.
Other countries that have since brought more goods to Kenya, mostly as a result of being in the same trade bloc, include Egypt.
The loss of export market has also led to job losses, according to Statistical Abstract 2019.
Data from the national statistician sounded a warning bell to those engaged in the manufacture of vegetable and animal oils and fats, as this sub-sector shed a staggering 12,743 jobs between 2014 and 2018. The job losses touched 18 manufacturing sub-sectors in what has been blamed on the increased cost of production, including the high cost of electricity, punitive taxes, bureaucracy and high cost of credit, a big blow to one of Uhuru’s Big Four Agenda.
The affected sub-sectors include textile, manufacturing, fish, vegetable and fruit processing that have been identified as part of Uhuru’s job creation ambition under the Big Four Agenda. Manufacturing is expected to create one million jobs by the time the President leaves office in two years.
Current figures could even be worse given that the other affected sub-sector, sugar manufacturing, for example, has seen even more job losses owing to the closure of Mumias Sugar, once the country’s biggest sugar miller.
Experts note that one of the reasons Kenya is losing out is because it does minimal value addition. “We do very little value-addition on tea and coffee,” says Timothy Njagi, a research fellow from Tegemeo Institute, a public policy think-tank affiliated to Egerton University. Dr Njagi says that most of the Kenyan tea is used for blending.
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