Trade, Investment and Sustainability

Kenya Needs Investment for Electricity
Kenya needs to invest Sh35bn (US$45bn) annually in power generation over the next 10 years if the country is to meet its electricity needs as envisioned in the vision 2030. The Sh350bn (US$454bn) is to finance generation of an additional 2,000 megawatts of electricity by 2018. Kenya’s power generation company now stands at 1345 MW against an eight percent annual growth rate.

The Kenya Electricity Generating Company (KENGEN) says additional 2,000 MW will meet the country’s expected increase in demand for electricity as it moves to become a middle-income nation. To finance the drive, KENGEN is preparing to launch an infrastructure bond to borrow money from the public. The power producer is in the process of raising Sh15bn (US$19bn) in its first bond offer.

Rise in Electricity Tariffs
The local business community is threatened with higher energy costs just when it is engaged in an intricate balancing act to weather the global economic storm. The Kenyan Energy Minister Kiraitu Murungi warned that electricity tariffs could rise following the erratic rainfall patterns, oil marketers have joined the fray asking consumers to brace for increases in pump prices.

For most companies, energy bills constitute up to 40 percent of the cost of production. The decision by the Organisation for Petroleum Exporting Countries (OPEC) in 2008 to cut down on production and stop further drop in prices has since January 2009 caused the prices of both crude and refined products in the international market to rise.

Competition Hits Mobile Sector
Kenya’s mobile sector is going through a transformative stage that will see profits fall as competition heightens. The number of subscribers in the local mobile telephony market could double by 2010, indicating that vast opportunities still existed for investors in the field.

According to data from the industry regulator, the Communication Commission of Kenya (CCK), the last quarter of 2008 proved a watershed period in the industry as a vicious price war and the entry of two new players in the market-Safaricom and Zain. The regulator said it was working to promote competition and stop perception that there was a dominant player who could influence pricing by pushing operators to conform to new pricing guidelines.

COMESA: Fund for Poverty Reduction
The COMESA will administer the US$3.4mn grant approved in 2008 by the African Development Bank (AfDB) to help member states implement programmes aimed at fighting poverty. However, the COMESA Secretariat warned that this grant cannot be used for executing large-scale undertakings, such as population censuses, agriculture censuses, and household surveys but it can be used for carrying out work at the preparatory and analytical phases of these activities.

The programmes will be undertaken in four cluster areas approved by the AfDB and will be based on the priorities approved by the member states’ National Strategies for Development of Statistics or Poverty Reduction Strategy Papers (PRSPs).