African countries stockpile weapons in the face of Boko Haram, Al Shabaab insurgency


In 2013, Africa recorded the most rapid rise in military spending in the world at 8.3pc. EAC states have spent more than $15 billion since 2004. TEA GRAPHIC |   NATION MEDIA GROUP

In 2013, Africa recorded the most rapid rise in military spending in the world at 8.3pc. EAC states have spent more than $15 billion since 2004. TEA GRAPHIC | NATION MEDIA GROUP

Beyond new roads, railway lines, shopping malls and skyscrapers dotting cities across the continent, Africa is now bristling with new weapons to replace its ageing inventories.

Since 2004, military spending by African countries has increased by 81 per cent and in 2013 the continent had the largest rise at 8.3 per cent in military spending in the world.

According to data from the Stockholm International Peace Research Institute (SIPRI), African countries spent $44.9 billion on their militaries between 2012 and 2013 and in the whole of the past decade, more than $300 billion.

In East African Community (EAC), member states have spent more than $15 billion since 2004 on their militaries.

Kenya leads the pack, having spent more than $7 billion on its armed forces. Uganda is second with more than $4 billion in expenditure over the last decade, followed by Tanzania at $2.7 billion, Rwanda at $825 million and lastly Burundi with $513 million.

READ: Kenya’s defence budget grows ahead of Africa peers in 2013

Since 2001, Kenya’s military has been in the midst of a modernisation programme aimed at replacing the force’s ageing weapons to fight emerging threats in the Horn of African region, such as terrorism, arms smuggling, human trafficking and drug trafficking.

This year’s $1.7 billion defence budget will go to acquiring 10 new military helicopters, refurbishment of three grounded Russian-made Mi-17 helicopters and installation of closed circuit (CCTV) surveillance cameras in 10 cities to secure the country following a series of terrorist attacks by Al Shabaab.

According to a recent report on Kenya’s defence industry market attractiveness, overall military spending will grow to $5.5 billion by 2018 as the country acquires helicopters, eight new warships, armoured vehicles, unmanned aerial vehicles (UAVs) and border surveillance and monitoring equipment.

Uganda has actually recorded a drop in military spending from the all-time high of $1.02 billion in 2011 to $465 million this year. The cut has been attributed to the heavy military hardware Uganda purchased between 2009 and 2013.

During this period, Uganda’s arms imports increased by 1,200 per cent, higher than between 2004 to 2008 due to the delivery of six Su-30 combat aircraft worth $744 million and 44 T-90S tanks from Russia and 4 S-125 SAM systems from Ukraine.

READ: Nairobi joins Uganda in arms shopping spree

Some of these weapons are now in use in the country’s interventions in the civil wars in South Sudan, Somalia and the Central African Republic where it is hunting down warlord Joseph Kony of the Lord’s Resistance Army.

Tanzania’s military is on a fast-tracked modernisation programme.

In September, President Jakaya Kikwete said his administration is “in the process of acquiring modern air force equipment, which includes attack helicopters, modern aircraft and other high-tech gear.”

New system to slash cargo clearance time at Mombasa port, other points


A section of the Berth 20, that is under construction at the Port of Mombasa. Kenya’s ultimate aim is to secure a geostrategic position as the key access to the Indian Ocean to serve the economic zone straddling the Nile Basin countries.

A section of the Berth 20, that is under construction at the Port of Mombasa. Kenya’s ultimate aim is to secure a geostrategic position as the key access to the Indian Ocean to serve the economic zone straddling the Nile Basin countries.   

Nine government agencies involved in cargo clearance at theKenyan port of Mombasa have until December 31 to migrate to the Single Electronic Window System before its full rollout.

Starting January 1, all trade transactions involving the agencies — including applications for permits, as well as payment and collection of taxes, fees, duties and levies needed in cross-border transactions — will henceforth be made through the new system.

According to Alex Kabuga, the chief executive officer of the Kenya Trade Network Agency (KenTrade) — a state corporation set up to implement, operationalise and manage the National Electronic Single Window System — so far, 15 agencies are on board and are using the system but nine others are yet to join.

“The target is to have all the 24 government agencies involved in cargo clearance at the port and border posts integrated with the single window by December 2014, which is in line with the Port Charter,” said Mr Kabuga.

READ: New Mombasa port charter to ease operations

“The target is to have the configuration and training for these agencies completed in time for it to go live by January 2015 alongside all other government agencies.”

The Agriculture, Fisheries and Food Authority; Kenya Maritime Authority; Postal Corporation of Kenya; Anti-Counterfeit Agency; Kenya Police Service; Kenya National Chamber of Commerce & Industry; and the Ethics and Anti-Corruption Authority are yet to migrate to the electronic system.

The Kenya Revenue Authority (KRA), Kenya Bureau of Standards, Pharmacy and Poisons Board, Port Health and the Horticultural Crops Development Authority are already integrated in the system.

Launched by President Uhuru Kenyatta on May 2, the Single Electronic Window System is expected to facilitate international and domestic trade at the port. It has been touted as the solution to the persistent delays at the major gateway to the region.

The system will allow parties involved in trade and transport to lodge standardised information and documents at a single entry point. That is expected to reduce the time it takes to process goods through Customs at the port by half — from seven days to three.

READ: Cargo clearance system to save $150m

Clearance time to fall

At the country’s airports, cargo clearance time will fall to just one day from five while at border posts it will take an hour instead of two days, sponsors of the $18 million project said.

According to Mr Kabuga, since its launch, there has been a 40 per cent increase in trader and company compliance levels and this is expected to go up to 80 per cent by June next year.

Mr Kabuga said efforts spearheaded by the East African Community Secretariat are under way to have a regional electronic single window system that will be integrated into the EAC Single Customs Territory (SCT). A technical working group has been formed to work on the concept, he said.

Slowdown in China economy could hurt Africa – Moody’s


Chinese and South Sudanese workers in South Sudan. China is now Africa’s largest trading partner, with China-Africa trade reaching $166 billion in 2011, $198 billion in 2012 and $210 billion in 2013.

Chinese and South Sudanese workers in South Sudan. China is now Africa’s largest trading partner, with China-Africa trade reaching $166 billion in 2011, $198 billion in 2012 and $210 billion in 2013.

A slowdown in China’s economy in 2015 could negatively affect sub-Saharan Africa, global rating agency Moody’s has said.

Moody’s expects Chinese growth, one of the drivers of global GDP, to be between 6.5 and 7.5 per cent in 2015. China, which accounts for 13 per cent of the world’s GDP, has recorded a deceleration in growth.

The global rating agency said the deterioration in commodity prices in China, and the country’s significant contribution to some African countries’ foreign direct investment could hurt economies that are dependent on the Asian giant.

Many countries on the continent have “looked East” for cheap loans to power infrastructure projects.

READ: EAC’s new strategies look East to shore up falling tourist arrivals

“For sub-Saharan Africa, risks emerge from its links to China’s economy, with sovereigns demonstrating strong regional trade links facing lower risk than those that rely on commodity exports,” said Matt Robinson, vice president and senior credit officer at Moody’s.

In its annual Global Sovereign Outlook, the agency said Kenya, Uganda, Mozambique, Botswana, Ghana, Namibia and Senegal are less directly vulnerable to the China economic meltdown, mostly because of their trade links with Europe. These countries’ exports to Europe are between 50 and 70 per cent.

Mr Robinson said the importance of China to sub-Saharan Africa as an export destination has risen and is almost at par with traditional European trading partners. This has resulted in greater trade integration and a near-doubling in sub-Saharan Africa’s share of global trade over the past decade.

“Resource exporters such as Democratic Republic of Congo, Angola, Zambia, Congo and South Africa are the most vulnerable,” said Mr Robinson.

For decades, China has been contributing to Africa’s economic growth, both in trade and infrastructure. Throughout the continent, China is involved in various multibillion-dollar developments in roads, railways, ports, and airports, replacing Western donors who have shied away from funding the projects.

In May, while addressing the African Union in Addis Ababa, Chinese Premier Li Keqiang announced that his country would increase its loans to African countries by $10 billion, bringing the total to $30 billion. China also said that it would raise the China-Africa development fund by $2 billion, to $5 billion.

China is now Africa’s largest trading partner, with China-Africa trade reaching $166 billion in 2011, $198 billion in 2012 and $210 billion in 2013.

READ: China-Africa trade surpassed $200 billion in 2013

In 2013, Chinese direct investment in Africa was $3.5 billion, with a year-on-year growth rate of 20.3 per cent. China’s cumulative direct investment in Africa is expected to hit $100 billion by 2020.

Odhiambo Ramogi, managing consultant at Elim Consulting, said African countries should diversify their economies as much as possible away from supplying unprocessed natural resources to China.

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Warehouse receipts yet to be accepted as tradable instruments in the region


Isaac Chege, director of the Nafic Grain Trading Company at his EAGC-Certified warehouse in Eldoret.

Isaac Chege, director of the Nafic Grain Trading Company at his EAGC-Certified warehouse in Eldoret.    

A regional grain marketing initiative meant to stabilise prices and reduce post-harvest losses is yet to make a meaningful impact among smallholder farmers in Kenya.

Officials from the Eastern Africa Grain Council (EAGC) and its principal financier, Alliance for a Green Revolution in Africa (Agra) blamed the shallow penetration of the warehouse receipt system on mistrust and lack of awareness along the value chain on the advantages of using the receipts as tradable instruments.

“The transferability of warehouse receipts has not been widely accepted” said Anne Mbaabu, the marketing director of Agra’s Market Access Programme (Map). She added that this has limited the development of a secondary market besides increasing logistics and transaction costs.

Agra, whose main financiers are the Melinda & Bill Gates Foundation, launched a Map in mid-2008 to promote markets, ensure higher returns to smallholder farmers and address market failures in Kenya and elsewhere in the region. It has so far invested about $2 million in the programme.

From reports, much of Agra’s money has gone to finance the EAGC — which is most active in Kenya. The Tanzania Warehouse Licensing Board and the Ghana Grain Council have also benefited.

“We are also working with the governments of Burkina Faso and Mozambique to introduce the warehouse receipt system,” said Mbaabu.

Despite these ambitions, the warehouse receipt system has inherent weaknesses including operating in a legal vacuum.

According to Ms Mbaabu, lack of a legal framework has been “causing reservations” among some financial institutions who she says have not been keen to use contract law as the basis of lending against the warehouse receipts.

The system enables farmers, traders and grain processors to deposit their produce in EAGC-certified warehouses upon that they are issued with official receipts which they can either offer for sale to buyers or use as collateral to secure bank loans.

EAGC says that this helps to meet farmers and other grain handlers’ financial needs as they wait to sell their produce at a later date. The system is also supposed to reduce post-harvest losses a major problem among particularly smallholder farmers. It is also meant to stabilise producer prices and thereby raise farmers’ incomes.

However, the system does not guarantee that farmers will always get good prices for their produce. Gerald Masila, EAGC’s chief executive, said the warehouse receipt system “is plagued by challenges related to its scale of operation as well as the timing of grain releases to attract better prices.”

Lack of training

It was apparent from interviews with farmers in the North Rift that the entire system hinges on the belief that the price of grains and particularly maize would have risen between the time farmers deposit their maize in the EAGC-certified warehouses and the time they sell it. This has not always been working as expected, leading to some smallholder farmers to experiencing losses.

Philomena Wambui is one of the smallholder farmers who experienced losses after taking up the warehouse receipt system in 2012.

Ms Wambui, a middle aged woman from Moi’s Bridge, in Trans Nzoia had borrowed Ksh500,000 from Equity Bank in 2012 against some 300 bags of maize she had deposited at Mama Millers Ltd, an EAGC certified warehouse located in the same area. Of the 300 bags she delivered to the warehouse, 120 bags came from her own 10-acre farm while she had bought the additional 180 bags from other farmers.

Countries asked to create wealth, promote equity to get millions of people out of poverty


                 Early this year, Kenyans reacted with shock when a family in Turkana County in northwest Kenya roasted two puppies for dinner, following a severe famine.

The pictures of the family seated around the roasted puppies became a major topic on social media for many days.

According to county administration officials, the woman said she had no alternative but to roast her puppies because she could not sit and watch her children die of hunger.

Though relief food was immediately sent to the family, it revealed the magnitude of poverty in some of the country’s remote areas, where harsh climatic conditions reign supreme, to say nothing of the limited opportunities available for escaping the problem.

In fact, according to the latest Socio-Economic Atlas of Kenya report, Turkana is one of the counties with the highest number of people living below the poverty line or less than $1.25 a day.

Although the national poverty rate has fallen marginally from 46 per cent to the current 45.2 per cent in the past few years, the main worry is the 17 million Kenyans (nearly half of the country’s population) who still live on less than $1.25 a day.

Some economists believe the number could be higher given the fact that the figure quoted was based on the 2009 census, which had the total population at 38 million. The World Bank currently puts Kenya’s population at 44.35 million.

“Clearly, poverty reduction must remain at the top of the country’s development agenda,” says the recently launched Socio-Economic Atlas, which highlights socio-economic development indicators based on the 2009 Population and Housing Census and 2005/6 Kenya Integrated Household Budget Survey data.

The problem is not confined to Kenya since other East African Community member states are also grappling with poverty.

As the 2015 deadline approaches for countries to meet the first Millennium Development Goal of halving the number of people living below the poverty line, millions in the region are still caught in the poverty trap.

READ: Lessons from China: How Africa can create jobs and reduce poverty levels

“I do not see any of the East African countries meeting the MDG target of halving poverty by next year. They still have a lot to do to improve the standard of living and create more opportunities for their populations,” said Robert Lwanga, a consultant on development issues.

Burundi, a country that has suffered years of instability due to internal conflict, has the highest percentage of people living below the poverty line, followed by Kenya.

According to World Bank figures, 66.7 per cent of Burundians live below the poverty line. In other words, out of a population of 10.16 million, 6.8 million are considered poor.

“The recent human development index showed that seven out of 10 Burundians still live on less than $1.25 a day. It means Burundi must achieve and sustain high economic growth rates over a long period to pull more people out of poverty,” said Mr Lwanga.

For communities such as the one to which this mother and child belong, it is normal to live on less than $1.25 a day. PHOTO | FILE

For communities such as the one to which this mother and child belong, it is normal to live on less than $1.25 a day. PHOTO | FILE

Probe implicates Museveni in stalled railway contract


From left, Ugandan MPs Abdu Katuntu, Barnabas Tinkasiimire, Theodore Ssekikubo and Wilfred Niwagaba share a light moment after addressing journalists in Parliament. MPs accuse President Museveni of influence-peddling in award of standard gauge railway tender.

From left, Ugandan MPs Abdu Katuntu, Barnabas Tinkasiimire, Theodore Ssekikubo and Wilfred Niwagaba share a light moment after addressing journalists in Parliament. MPs accuse President Museveni of influence-peddling in award of standard gauge railway tender.

An inquiry into the controversies surrounding the award of a $1.5 billion (about Ush4 trillion) tender for the construction of the standard gauge railway line heard that President Museveni “personally” procured China Harbour Engineering Corporation (CHEC) to construct the eastern route of the railway line.

Ugandan MP Wilfred Niwagaba, one of the five MPs who raised the red flag over the deal, tabled three letters from Museveni, with orders that the deal be offered to CHEC.

In his August 22 letter to the Works minister and several government officials, Mr Museveni also directed that a feasibility study conducted by the government be given out to CHEC at no cost though the government paid $5 million to carry out the study, according to Mr Niwagaba.

READ: Museveni set to clear talks with Chinese firms on SGR

“We must demonstrate leadership in this project. I do not want any further delays. I hereby direct that: engage CHEC to undertake the development of Kampala-Malaba-Tororo –Gulu-Nimule with a branch from Gulu to go via Pakwach. Utilise the studies undertaken by government to fast track the development of SGR,” read part of Mr Museveni’s letter.

READ: Railway project hits fresh barrier in Uganda as Kenya lays foundation

Niwagaba accused the President of influence-peddling.

“He becomes the chairman of the contracts committee. The President is not only awarding a contract to CHEC but also directing government officials to simply clear,” Niwagaba said.

“The process is out rightly in violation of all sections of the law related to procurement. He personally procured this company called CHEC and if you read the law, the President is not anywhere near the procurement process of the laws of Uganda,” he added.

Following the President’s directive, junior Works minister John Byabagambi chaired a meeting where it was agreed to “bypass procurement procedures and ensure that there is no competitive bidding” for the deal, according to minutes of the February 28, 2014 meeting tabled before the committee.

READ: Minister’s action may delay Ugandan leg of railway project

The Permanent Secretary in the Ministry of Works is also accused of writing letters directing the contracts committee of the ministry to waive provisions of the law and directly award the deal to CHEC, a process that had been rejected by the Public Procurement and Disposal of Public Assets Authority.

The petitioners also poked holes in the contract awarded to CHEC, saying the firm did not conduct any feasibility study, is unaware of the route the line is taking, the price for constructing and the lifespan of the railway line.

The deal was also challenged by the permanent secretary in the Finance ministry, Mr Keith Muhakanizi, who in a November 4 letter, warned the Works Ministry that the work being done on the project is not enough to warrant financing.

“Preparatory work on the segment has not been sufficiently concluded to enable contract signature presented for financing. This is because significantly more preparatory work needs to be concluded the Tororo-Gulu-Nimule and other Uganda SGR segments,” Muhakanizi, who is also the Secretary to the Treasury, wrote.