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Development spending jumps – Daily Nation




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Expenditure on development projects in the first five months of the current fiscal year surpassed the target set by the National Treasury, pointing to increased economic activities which boost job opportunities for the expanding unemployed graduate youth.

A total of Sh203.1 billion was pumped into capital projects in the July-November period, the Treasury says in the draft 2019 Budget Policy Statement (BPS), Sh3.2 billion more than what it had targeted.

The bulk of the cash was, however, issued in October and November after development spending massively fell short of the Sh169.3 billion target in the previous three months by Sh101.2 billion, the Treasury said in the quarterly Economic and Budgetary Review for the first quarter (July-September) last November.

That means about Sh135 billion was disbursed to various development projects in October and November.

Underperformance in the absorption of development funds in the July-October period has largely been blamed on President Uhuru Kenyatta’s directive to State ministries, departments and agencies to finish projects already in progress before initiating new ones.

“The exercise to clean up the development project portfolio triggered by the presidential directive on inclusion of new projects in the budget also slowed down the uptake of development expenditures in the first quarter. This picked up strongly in the second quarter (October-December 2018) of FY 2018/19,” the Treasury says in the draft BPS statement.

Mr Kenyatta last July froze implementation of new projects by ministries and other State organs until ongoing ones are completed.

He directed that any new projects must be cleared by Treasury Secretary Henry Rotich first, adding that officials who defy the order will be held personally responsible.

“There will be no new projects that will be embarked on until you complete those that are ongoing,” the President said on July 20.

“Even if new projects are aligned to the Big Four they cannot be started without express authority from CS or PS of the National Treasury.”

Higher spending on development projects such as roads, water, power plants, real estate and electricity transmission lines stimulates economic activities, helping create job opportunities and grow government revenue, largely taxes.

The Treasury has not broken down expenditure by various ministries and departments in the draft BPS report, which will form the basis for the budget for the year starting July.

Treasury statistics in the monthly Statement of Actual Revenues and Net Exchequer Issues, however, shows the State departments of Transport and Energy posted the highest absorption rate of development funds in the five-month period through November.

The Transport department, charged with implementing projects such as the ongoing second phase of the standard gauge railway (SGR) from Nairobi to Naivasha, had the highest absorption rate at nearly Sh9.4 billion, or 75.2 per cent, of the Sh12.49 billion full-year budget.

The Energy department, which largely provides oversight in the building of power plants and transmission, absorbed 59 per cent, or Sh13.17 billion, of the Sh22.33 billion development cash it has been allocated in the current financial year.

Expenditure by the Department for infrastructure, however, remained the largest by size, with issues amounting to Sh16.37 billion or 22.6 per cent of the Sh72.35 billion estimates for 12 months through June 2019 to oversee such as roads and bridges.


Others with high absorption of development funds were Health (Sh5.42 billion of the Sh28.22 billion), crop development (Sh3.36 billion of the Sh16.76 billion), Interior (Sh3.33 billion of the Sh16.94 billion), Basic Education (Sh2.94 billion of the Sh9.25 billion) and University Education (Sh2.83 billion of the Sh10.31 billion).

Development spend by Department of Water and Sanitation in the five-month period was Sh2.56 billion of the Sh23.58 billion full-year estimates, while that for irrigation and ICT stood at Sh1.24 billion of the Sh5.79 billion and Sh1.01 billion of the Sh10.80 billion projection.

Overall, expenditure on development projects accounted for 24.5 per cent of the Sh829.1 billion spent in the period. That is short of the legal requirement for 30 per cent in three to five years under section 15 of the Public Finance Management Act of 2012.

“The government will continue with fiscal consolidation efforts. Deliberate steps will be undertaken to narrow the budget deficit and stabilise public debt, prioritise development expenditures while protecting social spending and investments,” the Treasury says in the draft BPS.

The government remains the biggest buyer of goods and services from the private sector, and reduced spending on projects hurts momentum in economy which is recovering from a five-year low in 2017.

State spending puts money in private hands through demand for raw materials, which ultimately creates new jobs.

Cement makers, steel manufacturers, contractors and the thousands of workers employed in the infrastructure pipeline benefit from public spending and usually feel the pinch of a drop in public expenditure on development.

Private sector activity, as measured by monthly Stanbic Bank Kenya’s Purchasing Managers Index (PMI), appeared to pick up towards the end of last year, closing at a high last seen in 2014.

The headline PMI Index — the measure of private sector activity such as output, new orders, employment and supplies delivery times — rose marginally to 53.6 in December from 53.1 ia month earlier.

A point above 50 denotes growth in overall business activity compared to the previous month, while a reading below that mark denotes a contraction in activity undertaken by firms.

“The Stanbic PMI closed the year strongly, recording the highest average since 2014. We believe that GDP growth remains on track to test 6.0 per cent year-on-year in 2018 and furthermore the good weather conditions in …(quarter four) will have underpinned the agrarian sector as well,” Stanbic economist for East Africa Jibran Qureishi said in a statement on January 4.

“Moreover, firms scrambled to clear backlogs of stock in December which subsequently boosted output, while surprisingly costs remained steady for firms during the festive season as well.”

Companies further reported increased export orders, indicating that firms experienced an influx of both domestic and overseas demand.

Kenya’s economic activities last year recovered from a five-year low in 2017 spurred by improved weather and a better investment environment following a March 9 truce between President Uhuru Kenyatta and Opposition chief Raila Odinga — popularly known as the Hand Shake.

“Growth momentum will likely be sustained in 2019, as healthy remittance inflows and a tighter labour market drive solid private consumption, while upbeat business confidence fuels a strong expansion in fixed investment,” Researchers at FocusEconomics, a Barcelona-based economic forecast and analysis firm, said on December 14.



Sordid tale of the bank ‘that would bribe God’




Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –




Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

Read Also: Galana Kulalu Irrigation Scheme To Undergo Viability Test Before Being Privatised


“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

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William Ruto eyes Raila Odinga Nyanza backyard




Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

Development agenda

Won’t bear fruit

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