Kenya’s bureaucracy costs the country more than $300 million in investments

A decision by the Ministry of Foreign Affairs bureaucrats led by then Cabinet Secretary Amina Mohamed to dig in scuttled the process.

  • Kenya’s dilly-dally which run  for three years saw the regional bank patience run short and forced them to decide to move its headquarters to Kampala instead.
  • At the center of it was Kenya’s reluctance to grant the Bank employees diplomatic status which was further worsened by government bureaucracy.

This is after African Export-Import Bank announced that it would be setting up its Sh3 billion ($300 million) regional headquarters in Uganda, effectively denying Nairobi all the benefits that come with hosting such prominent international organisations.

Kenya’s dilly-dally which run  for three years saw the regional bank patience run short and forced them to decide to move its headquarters to Kampala instead, at the invitation of President Yoweri Museveni.

“It took too long to obtain the necessary approvals from Kenya, that is the reason we made the decision to go to Uganda at their invitation,” said Benedict Oramah, the chairman and president of African Export-Import Bank, Thursday confirming the report.

At the center of it was Kenya’s reluctance to grant the Bank employees diplomatic status which was further worsened by government bureaucracy.

In 2016, Treasury indicated that the country would finally sign the deal which had been in the works for over three years, paving the way for establishment of the regional headquarters in Nairobi.

Cabinet Secretary Henry Rotich had said in a letter to Afreximbank that his office had completed a review of the agreement to set up the office and the same had been forwarded to the Foreign Affairs ministry for “finalisation.”

“This is to inform you that the Treasury has now completed review of the branch office agreement between the Republic of Kenya and Afreximbank after consultations with Mr Kudakwashe Matereke, regional branch manager for East Africa,” Mr Rotich said in a letter dated September 22, 2016.

“We have forwarded the agreement to the Ministry of Foreign Affairs for finalisation and to formally communicate to Afreximbank.”

The agreement would be have been concluded and signed on the sidelines of the 2016 annual meetings of the International Monetary Fund and the World Bank Group in Washington, DC between October 7-9.

However, a decision by the Ministry of Foreign Affairs bureaucrats led by then Cabinet Secretary Amina Mohamed to dig in scuttled the process.

The Foreign Affairs ministry was said to be uncomfortable with several clauses in a draft agreement with the Pan-African lender touching on taxation and diplomatic privileges that Afreximbank had sought.

Afreximbank had wanted its employees and operations to be accorded diplomatic immunity and tax exemptions in line with the privileges accorded other multilateral institutions.

The lender had argued that the privileges were not unique to Kenya as they had been granted by host governments in Abuja (Nigeria), Harare (Zimbabwe), Abidjan (Cote d’Ivoire), Tunis (Tunisia) and Egypt (Cairo), its headquarters.

It also cited special privileges enjoyed by similar multilateral institutions and diplomatic missions in Nairobi.

More so Kenya’s ally and business rival, Ethiopia which was also eying the deal had no problem granting the bank diplomatic status keeping in mind the hefty returns.

Foreign Affairs Cabinet Secretary Monica Juma who was the Principal Secretary at the time has refused to comment on the issue.

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