Category: Economy

The Principal Secretary of the State Department for Public Health Mary Muthoni has defended the government’s plan to export qualified health professionals to other Countries which she said will ease unemployment in the Country.

Muthoni said the plan seeks to accommodate and offer a lifeline to thousands of graduating health professionals’ especially nurses from local colleges and universities.

The PS said each year over 20,000 well-trained nurses graduate from the Kenya Medical Training Colleges and other local institutions in the Country with only a handful of them employed locally.

In addition, the PS said current data has necessitated the move to enter into a Memorandum of Understanding with foreign countries to export qualified personnel.

So far, Kenya has signed an MOU on health partnership with the United Kingdom [UK] which will see a total of 20,000 nurses sent to UK hospitals by 2025 highlighting local nurses’ competitive edge.

Consequently, the government last year signed a bilateral labor agreement with the Kingdom of Saudi Arabia which seeks to regulate the export of skilled workforce to the Gulf Nation where 2500 nurses are set to benefit.

Muthoni dismissed the Council of Governors’ concerns over the high number of health professionals leaving the Country noting that the country has more qualified nurses than those absorbed and the move will not jeopardize local healthcare services.

“The government strives to ensure that the range of trained healthcare professionals are compatible and adhere to both local and international health standards while discharging their duties,” said the PS.

Speaking in Naivasha during a stakeholder meeting to develop the Quality of Care Bill [2024], Muthoni said the government is committed to overhauling the healthcare system to address the existing gaps in affording and accessing quality healthcare services.

The PS said the bill which touches on the core mandate of the Social Health Insurance Act [SHIA] will address the underlying quality of healthcare services, products offered, and personnel.

In addition, the bill which will come into force in the next three months will see the fixing of flagged dilapidated health and diagnostic equipment and the deployment of qualified personnel which will help lower the mortality rate in local facilities.

Muthoni said Ministry of Health officials are currently holding public participation forums on the Social Health Insurance General regulations across the Country before it’s rolled out in the coming months.

Under the Social Health Insurance Act, of 2023, the government seeks an overhaul of the current National Health Insurance Fund that has previously been plagued by corruption claims worth billions of shillings.

The SHI Act establishes three new funds which include Primary Healthcare Fund, Chronic and Critical Illness Fund as well as Social Health Insurance Emergency Fund all geared towards easing access and financing of healthcare to every citizen.

The government has proposed a cap of 2.75 percent cut of an employee’s gross salary and a minimum contribution of Sh300 for low-income earners to fund and accelerate the rollout of the noble initiative.

To ensure every citizen boards the Universal Health Coverage train, the government will cater for medical bills for the most vulnerable members of society including the elderly.

“The successful implementation of this initiative seeks to provide affordable, available, and quality healthcare services for all citizens,” said the PS.

Financial agreements worth KSh350 billion have been signed during President William Ruto’s visit to Japan.

These agreements will support projects and programmes in sectors that are aimed at turning around the economic fortunes of the country.

The largest projects to benefit are the Dongo Kundu Infrastructure Ecosystem and the Mombasa Gateway Bridge at the Coast at Ksh260 billion.

President Ruto and Prime Minister Fumio Kushida also agreed that Kenya will issue a Ksh40 billion Samurai bond in Japan to finance energy and infrastructure projects.

A Samurai bond is a yen-denominated bond issued in Tokyo by a non-Japanese company. The bond is, however, subject to Japanese regulations.

Kenya also secured Ksh30 billion from the Japan Bank for International Cooperation to purchase heavy machinery and mechanised assets.

The Olkaria Geothermal Development Project will get KSh15 billion. Japan will also provide KSh1 billion for the ⁠production of medical oxygen for various hospitals.

Through the United Nations, Kenya will receive Ksh320 million humanitarian aid ⁠for those affected by the recent El Nino-related floods.

Other agreements include MoUs on cooperation in the ICT, health, finance and security sectors.

He said the MoU will include enhancing the capacity of the Kenya Medical Research Institute (KEMRI) to build on its pandemic management potential at a cost of Ksh3 billion.

To strengthen the partnership between the two countries in defence, an agreement on Defence Cooperation was also signed. This makes Kenya ⁠the first African country to sign a defence pact with Japan.

The President acknowledged Japan’s support for the completion of Phase II of the Mwea Irrigation Scheme and the National Rice Masterplan.

President Ruto witnessed the signing of the bilateral agreements on Thursday after holding talks with Prime Minister Kishida of Japan.

The Canada-Africa Chamber of Business is thrilled to announce that His Excellency President (Dr.) William Samoei Ruto will officiate the second Canada-Africa Business Conference scheduled for 19^th – 20^th February 2024 in Nairobi. The event will also welcome Maninder Sidhu, Parliamentary Secretary to the Minister of Export Promotion, International Trade and Economic Development, in collaboration with the High Commission of Canada in Kenya.

In partnership with the Kenya Private Sector Alliance (KEPSA) and the High Commission of Canada, the Canada-Africa Business Conference is set to bring together industry leaders for a day-long program at the prestigious Muthaiga Country Club and a VIP Reception on 19^th February 2024. The program will be followed by a second day of site visits in Nairobi on 20^th February.

The conference is open to all corporate members of The Canada-Africa Chamber of Business, along with invited guests and sponsors. Sectors to be represented include infrastructure, energy, financing for Canada-Africa projects, and FinTech, with additional sector focus areas under development. The overarching theme will underscore Canada’s role as a trusted partner across African markets, emphasizing Kenya’s pivotal position as a key gateway to the East Africa region and the continent.

“We eagerly anticipate sharing program updates as we confirm the participation of leading decision-makers,” said Deepak Dave, Program Chair for the event.

Garreth Bloor, President of the Canada-Africa Chamber, expressed confidence in the success of the event, stating, “Our previous engagements in Kenya have always been an incredible success, and this is a testament – in no small part – to the key role of Kenya and KEPSA in Canada-Africa trade and investment.”

Ms. Carole Kariuki, Chief Executive Officer of KEPSA, conveyed enthusiasm about the collaboration, stating, “We are excited to collaborate with the Canada-Africa Chamber of Business and look forward to the forum that will promote trade and investment between Canada and our great continent of Africa. This forum aims to widen the scope of available opportunities in medical care, infrastructure, energy, FinTech, and project financing.”

All conference attendees are invited to join an evening reception on Monday, 19^th February, following the day’s program. Christopher Thornley, the Canadian High Commissioner to Kenya, has graciously extended this invitation to all delegates of the 2^nd Canada-Africa Business Conference.

Starbucks is being sued by a consumer advocacy group alleging that the global coffee chain falsely and deceptively advertises the “committed to 100% ethical sourcing” claim on its coffee and tea products.

The lawsuit, filed by the National Consumers League in a Washington, DC court, alleges that Starbucks misrepresents to consumers that it is “committed to 100% ethical coffee sourcing” and to “100% ethically sourced tea” even as it continues to source coffee beans and tea leaves from cooperatives and farms that “have committed documented, severe human rights and labor abuses, including the use of child labor and forced labor as well as rampant and egregious sexual harassment and assault.”

“On every bag of coffee and on every box of K cups sitting on our grocery store shelves, Starbucks is telling consumers a lie,” Sally Greenberg, CEO of consumer advocacy group National Consumers League, said. “The facts are clear. There are significant human rights and labor abuses across Starbucks’ supply chain,” she said.

The goal of the lawsuit is to protect consumers nationwide, who may “unknowingly be buying unethically sourced coffee or tea” from the brand and be paying a a premium for those products, according to the consumer league.

“Consumers have a right to know exactly what they’re paying for,” Greenberg said in a news release.

Supply chain criticism

Greenberg alleged “well-documented instances” for years in the retailer’s supply chain of “slavery-like conditions,” child labor, human trafficking and other exploitative working conditions on farms and co-ops where Starbucks sources its coffee and tea.

She referenced an incident dating back to 2022 when a Brazilian labor prosecutor issued a complaint against Starbucks’ largest Brazilian supplier, “citing working conditions analogous to slavery, including illegally trafficking more than 30 migrant workers.”

The lawsuit, however, cites investigative reportsin Brazil this year about workers at a Starbucks’ certified coffee supplier who allegedly were victims of wage theft by their employer, in violation of Brazilian law.

A separate investigative report from the BBC in February 2023 looked into alleged gender-based violence and sexual harassment at a Kenyan tea plantation, which the report said supplied to Starbucks at the time.

Greenberg said her group is seeking to restrict Starbucks from further engaging in deceptive advertising and to run a corrective advertising campaign.

”Starbucks must reform its sourcing practices to ensure that workers on the farms and cooperatives that supply its coffee and tea products are treated fairly and in accordance with the law,” she said.

There was an explosive controversy between Kenya Power technical staff and engineers over the quality and accuracy of 60,000 electricity metres that were recently imported from China at an estimated cost of Sh300 million, The Weekly Review can reveal.
It is an episode that raises several pertinent questions, especially with regard to consumer pro- tection. When different teams of technical staff and engineers arrive at different conclusions about the technical integrity of electricity metres, who between the two teams of technical staff and engineers should the con- sumer believe? Where is the assurance to the ordinary consumer that the metre is not faulty?

These questions are pertinent because Kenya Power itself re- cently made pleadings at the High Court, where it disclosed that it had been facing an unprecedentedly large number of cases of metre failure. In the court battle, the utility firm was pitted against a cartel of Chinese manufacturers and local entities that assemble the gadget from kits imported from China.

Indeed, procurement of metres and transformers has been rid- dled with accusations of corrup- tion. Over-ambitious connection targets spawned unfettered purchase of Chinese metres, whose quality was questionable. In 2018, two managing directors of Kenya Power and 19 procurement staff were arraigned in court to face prosecution for procuring low-quality metres and trans- formers and for outsourcing line construction and other related services to non-qualified,unregis- tered firms.

The details of the latest controversy are as follows: Last year, KPLC awarded a contract to Hexing Electricals Ltd of Hangzhou, China, to supply it with metres. The Chinese company successfully performed and delivered on January 27. As is customary, a three-person acceptance com- mittee was appointed and tasked to conduct laboratory tests on the metres. The members of the team were James Ndegwa, Nancy Wairimu Mungai and John
Kinyua. Testing of the metres at KPLC’s lab commenced immediately after delivery while inspec- tion was conducted on February 3.
As it turned out, this techni- cal team rejected the metres after finding that the ‘customer in- terface unit’ (CIU) and ‘measuring control unit’were not functioning properly. With this development, the expectation was that the metres would be rejected.
It did not happen. Instead, the General Manager for Sup- ply Chain and Logistics, Dr John Ng’eno,appointed a new four-person team to conduct separate tests on the metres. The new technical team consisted of Peter Wanyonyi, Benson Dianga, Patricia Nthenya and Vincent Hassauna. In a surprising twist, it arrived at the conclusion that ‘the metres can be accepted and issued for use in metering customers’.

Still, a closer scrutiny of the rec- ommendations of this second team shows clearly that their acceptance and endorsement of the metres from China was qualified. They said: “The monitoring of these metres should start soon after they are deployed for confir- mation if behaviour is consistent with the samples we tested.”

The team also recommended that laboratory tests were not enough, suggesting that future tests for functionality features whose testing conditions cannot be fully simulated in the laboratory be authenticated by additional tests on site before they are ac- cepted.This second recommendation flies in the face of reason because KPLC in 2019 went to the rooftop to announce how it had invested hundreds of millions of shillings in a new laboratory. The company touted the facility as the only accredited lab for testing en- ergy metres in East and Central Africa.

In yet another twist, the KPLC management decided to disregard and ignore the findings of the four-person technical team that had rejected the metres from China as of low quality. Even more intriguing and in order to disguise the fact that a disagreement had emerged between technical teams over the integrity of the Chinesemetres,themanagement decided to create a third acceptance committee, this time putting the two teams together.

Clearly,it was an arbitrary move made to give the impression and pretence that the technical integ- rity of the Chinese metres had been agreed upon by the majority and that differences of opinion arising from laboratory tests can be hidden by arbitrarily harmonising the findings.

This saga begs the following question: Whose responsibility is it to independently monitor accuracy of data and the proper functioning of metres? Whose job is it to ensure that the consumer is protected from faulty electricity metres? In a sense, it does not surprise that the metres from Chi- na turned out to have quality and technical integrity issues.

It has emerged that Hexing Electricals was allowed by KPLC to cir- cumvent a key quality test and procedure right from the beginning,at the manufacturing stage. The Weekly Review has seen correspondence showing that KPLC wrote a letter to the Chinese company taking the unprecedented decision of granting a waiver for Factory Acceptance Tests. “We have granted you approval to manufacture metres and to invite a technical team from KPLC to conduct factory acceptance tests.

However, due to acute shortage of metres, we are waiving the requirement for factory acceptance tests to shorten delivery times,” said a letter by Dr Ng’eno dated December 19,2022.

Factory acceptance testing helps
verify that newly manufactured and packaged equipment is of the required quality. Long-standing vulnerabilities in the supply chains of metres, transformers and poles has been identified as one of the reasons why KPLC is in financial straits.

An internal audit conducted in July 2021 could not even reconcile rudimentary data on the number of metres purchased, the number of installed metres that were not vending and metres that were recorded as faulty. Many ex-Kenya Power staffers who had been engaged by the company as contractors were found to be holding huge stockpiles of pre-paid metres, which they were selling directly to post-paid customers.

Many pre-paid metres could not be found in locations where they were validated within the ERPsystem,whileillegalconnec- tions were found to have genuine Kenya Power metres that had been validated in the company’s ERPsystem. This messy situation spawned a bigger problem,namely excessive buying of metres. The total loss of control over supply chains of this critical product was happening in the context of entry into the space of plants assembling Chinese metres that are co-owned by the Chinese and politically inf luential locals.

Over time, Kenya Power had become dangerously dependent on a little cartel of metre suppliers. Until the group lodged a case at the appeals tribunal under the name‘The Energy Metres and Assemblers Esso- ciation’, it had not become appar- ent that what was at play was an official cartel.

Last year, the company was engaged in an explosive legal dis- pute, with the petitioners pushing it to relax new stiffer rules on the quality of metres. The petitioners are arguing that the new rules amount to discrimination and are meant to lock local assemblers out of the lucrative con- tracts for metres.

On its part, Kenya Power has maintained that it has been experiencing an unprecedented level of metre failures from gadgets purchased from the Chinese
and their influential local patrons. Kenya Power suspended 59 senior staff in its supply chain division to pave the way for a forensic audit into their dealings and the company’s procurement systems. Many months later, the suspended staff were all allowed to resume duty.

(Weekly Review)

WEEKLY REVIEW: It’s a gripping tale about the lengths to which greedy elites will go to squeeze money out of cash-rich parastatals, especially in the build- up to a general election when they are surrounded by uncertainty and prospects of im- minent regime change.

The Weekly Review has seen documents showing how towards the end of the regime of former President Uhuru Kenyatta the Na- tional Treasury crafted a bizarre scheme to ir- regularly raise a whopping Sh42 billion from the state-owned Kenya Pipeline Company.

In a nutshell,the transaction was structured as follows: You force a parastatal that you own 100 per cent to borrow billions from a syndi- cate of banks to purchase another asset that you also own 100 per cent, and in the process, raise billions of shillings for the exchequer. Indeed, KPC was being forced by the Nation- al Treasury, its shareholder, into buying the Changamwe-based Kenya Petroleum Oil Re- fineries Ltd, whose facilities have been under its management under a lease arrangement since March 2017.

Documents seen by The Weekly Review show that stakes had been so high that former National Treasury Cabinet Secretary, Ukur Yatani, personally took charge of the transaction and would at some stages personally at- tend board meetings of KPC as he strenuously and laboriously scrambled to unlock the irreg- ular transaction by forcing a board resolution. Cabinet Secretaries rarely attend board meet- ings of parastatals.

This was clearly an irregular transaction in many ways. Consider the following: You buy non-revenue generating assets that you al- ready own with borrowed money, and dump a huge liability with third-party banks on the books of KPC,a company you owned at the beginning of the transaction.
But even more controversial was the valuation the National Treasury was scrambling to force through a resolution of the KPC board. According to correspondence in our possession, the Sh42 billion valuation that the Na- tional Treasury was hurriedly forcing through was conducted by the Ministry of Lands and Housing. It begs the question: Where is transparency in a transaction where the government is buying an asset it already owns on the basis of a valuation conducted by itself? Where is arm’s length and how do you buy an asset at a price you have decided by yourself ?

We have seen correspondence showing that the CEO of KPC, Dr Irungu Macharia, wrote to the National Treasury informing the company’s sole shareholder that in the corporation’s own assessment,the assets deemed useful from a business perspective were valued at a figure much lower than the government’s Sh42 billion valuation.
KPC insisted on a valuation of Sh19 billion for KPRL’s assets that it deemed useful for its business.
But the clearest indication that the trans- action that the National Treasury was trying to force on KPC was dodgy and bizarre was to emerge in a report by the financial services advisory group, PricewaterhouseCoopers Ltd (PWC), a copy of which has been seen by The Weekly Review.

In brief, PWC’s assessment of the transaction was as follows: This asset is yours and KPC can get it for free by transferring the shares at a paper con value. PWC’s conclusion was sensational, considering that the National Treasury was almost succeeding in forcing KPC to take up a loan of US$400 million to pay for the as- sets of KPRL.
PWC’s valuation of land, buildings, tanks and pipe works, and a captive power plant also came to a mere Sh17.9 billion, which was a much lower figure when compared with the government’s valuation of Sh42 billion.

What comes through from the correspond- ence is that the National Treasury was adamant about proceeding with the Sh42 billion valuation. Indeed, the National Treasury ap- proval for KPC to borrow the large amount had been given as far back as December 1, 2021.“The purpose of this letter is to grant you approval to borrow Sh42.6 billion and to refinance the existing facility,”said Yatani in a letter to KPC.

Is it not the height of irony that the Nation-
al Treasury was planning to saddle KPC with this massive dollar loan despite the fact that the company was at that time still in the mid- dle of servicing a massive US$350 million loan it had borrowed in 2015 to construct a 20-inch diameter pipeline from Mombasa to Nairo- bi? As the pressure on KPC to borrow the mon- ey mounted, the company wrote to Standard Chartered Bank of the UK  the mandated lead arranger in the existing dollar loan  to ask for the money.“We are seeking to refinance the existing facility,whichstandsatabalance of US$149.9 million as at December 2021, as well as raise additional funding of Sh42.6 bil- lion to be utilised for acquisition of the KPRL facility,”said the company in a letter dated De- cember 17,2021.

What saved KPC from this dodgy transac- tion that was going to saddle the company with massive loans? Clearly, the change of the regime following the advent of President William Ruto’s administration in 2022 was a major factor.Pockets of resistance against the deal from within the board of the company were also an important contributory factor. Doc- uments show how the board at one point in- sisted that the borrowing of the money be delayed until thorough due diligence of KPRL and a comprehensive business case for the ac- quisition had been conducted.

The board also insisted on an independent report by the PWC report on the best take-over options. As it turned out, term sheets from the financiers and lenders did not come through until January,2021.
The lenders also spelt out conditions that in- cluded appointment of an independent trans- actions adviser. The procurement of an inde- pendent adviser did not happen until April 2022. With the General Election approaching in a few months and a change of regime imminent, the National Treasury found itself without the political muscle to push through the unpopular and dodgy transaction.

KPRL has 45 tanks with a total storage capacity of 484 million litres, out of which 254 million litres is reserved for refined products while the remaining 233 million litres is reserved for crude oil. The thinking was that these facilities would provide additional storage capacity for KPC,which would unlock supply chain bottlenecks in Mombasa and save oil marketing firms millions of dollars paid on demurrage charges to shipping companies.
KPRL also has about 370 acres of underutilised land at the port which KPC intended to use to construct storage facilities,including for LPG.