News East & Horn Africa Kenya back to business after elections

Sat,29Nov2014

Posted on Wednesday, 03 April 2013 11:05

Kenya back to business after elections

By Parselelo Kantai in Nairobi

Brookside Dairies, the country’s largest, is a Kenyatta family concern/Photo©NATION MEDIA GROUPThe Jubilee Alliance win has pleased Kenya's trading partners, who look forward to milking infrastructure, energy and resources contracts in the regional hub.

Assiduous wooing by its business backers assured the Jubilee campaign of the closest financial ties with the hyper-economies of Asia, China and India.

Kenya is the region's largest economy and trading hub, and the Kenyan government wants to position itself as a platform for resource-based and productive investments that will tie East Africa's economies ever more tightly to those economic giants across the Indian Ocean.

Among Kenyatta's key campaign financiers were Jimmy Wanjigi and Alfred Gitonga, as well as high-level officials in the military, civil service and security establishment, many of whom lined up major infrastructure deals with Chinese and Indian investors.

The scramble for contracts will include the fast-growing geothermal energy sector, the multibillion-dollar Lamu port, the building of a standard gauge railway from Mombasa to Kampala and the long-delayed pipeline extension project from Eldoret to Kampala.

Natural resources will draw in still more money.

Oil finds, coal, gold, mineral sands and iron promise to attract business in the coming years.

"The fact that the [election] dispute was taken to the Supreme Court rather than resolved in the streets has had a major impact on business confidence," says Patrick Obath, chairman of the Kenya Private Sector Alliance.

Although his organisation was invited to meet Kenyatta after the announcement of the results, it remains solidly apolitical, he insists.

Devolution Costs

Business's top concerns, he says, are the effects of devolved government, which came in with the 2010 constitution, on the cost of doing business.

"The long-term dividends of devolution will spread development across the country. In the short term, we need an assurance that [it] isn't costly to the government," he says.

The new two-tier government structure with 47 counties will mean an expansion of the public-sector wage bill on top of an already ballooning fiscal deficit.

That could push up recurrent spending to some 12 percent of gross domestic product, more than double the average in Africa, according to Habil Olaka, chief executive of the Kenya Bankers Association.

Both Kenyatta and Odinga control large corporate holdings: the Kenyatta family's interests are in tourism, banking, insurance, media and the dairy sectors; Odinga's Spectre Ltd supplies gas cylinders and has interests in the oil sector and the Kisumu Molasses plant.

Obath thinks policy makers will look beyond the parochial: "I don't think we are going to see the rampant abuse of power we experienced blatantly under the [Daniel arap] Moi government or more subtly under [Mwai] Kibaki. The constitution is taking root, but I could be wrong"●



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