Remarks by President Kenyatta during a Breakfast Event hosted by Aeolus Kenya and Corporate Council on Africa

From president.go.ke

Distinguished Guests,

Ladies and Gentlemen:

• I would like to express my profound gratitude and appreciation to Aeolus Kenya Limited (AKL) and the Corporate Council on Africa for organizing this event.
• Specifically the meeting will review the Memorandum of Understanding (MOU) between the Government of Kenya and the Government of the United States Concerning the Development and Implementation of Strategic Infrastructure Priority Projects in Kenya, which was signed in July this year during President Obama’s visit to Kenya.
• This MOU is a product of an unprecedented level of collaboration and coordination between my Government, the U.S. Government, and private sector organisations from both countries. It also builds on our discussions at the U.S.-Africa Leaders’ Summit and the U.S.-Africa Business Forum which were held in Washington, D.C. in August last year.
• This MOU puts Kenya and the U.S. in a position to make use of the cordial nature of our bilateral relationship by promoting greater U.S. commercial participation and investment in Kenya’s infrastructure sector, including strategic infrastructure priority projects – such as the expansive LAPSSET Corridor Project

• In 2014, Kenya’s economy grew at 5.4 per cent. It is projected that the economy will grow at the rate of six (6) to seven (7) per cent in 2015.
• In March this year, the World Bank estimated that Kenya’s GDP will reach $69.9 billion dollars in 2015 and Per Capita GDP will reach $1,587 dollars, taking us into the top half of the largest economies globally.
• This growth is underpinned by cheaper credit channelled into the productive sectors of the economy – including finance and insurance; trade; consumer durables; manufacturing; agriculture; mining and quarrying; real estate; building and construction; a strong expansion in the generation of electricity; financial intermediation; agriculture and forestry; manufacturing sectors and an improvement in the global economic conditions.
• The recent discoveries of oil and gas, coal, titanium and several other minerals, are expected to propel the economy to new levels of development.
• In addition, Kenya is currently implementing its long-term development blueprint – the Kenya Vision 2030. Some of the flagship projects under this vision offer major investment opportunities. They include; the expansion and modernization of the Port of Mombasa, development of the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor, the Standard Gauge Railway linking Mombasa with Nairobi, Kampala and Kigali, among others.
• We have also recently launched our first ever-industrial transformation programme that is geared towards accelerating our industrial renaissance. We believe we are on the right track to making Kenya the industrial hub in the continent.
• We are working towards a world-class business regulatory environment. Only two weeks ago, I signed into law a new Companies Act that has revolutionized the way we register companies. The previous act had been in place since 1948.
• Our new and first ever Special Economic Zones Act that is geared towards attracting global scale businesses is also now in place. I urge you all to take advantage of the opportunity this presents to make Kenya the home of your businesses.

• Besides maintaining a stable macro-economic framework, we have maintained business friendly reforms that are supportive to business operations.
• Kenya financial system has also grown considerably and is the largest and most developed in Eastern and Central Africa. The asset quality and liquidity positions of our financial institutions have drastically improved over the years, making the system more resistant to external shocks and disturbances.
• In recognition of the important role of the private sector as the engine of growth and an important partner in national economic development, the Kenyan Government has put in place a policy and regulatory framework that creates and ensures a favourable business environment.
• The Government has also developed a strong Public Private Partnership (PPP) framework that safeguards investments and reduces risks across all sectors. The LAPPSET Infrastructure Project is one of the projects that is being implemented under the PPP arrangement.

• The LAPSSET transport corridor project has an intrinsic regional dimension. It comprises of modern port facilities and rail, road, pipelines and fibre optic links to serve a hinterland comprising Kenya, Ethiopia, South Sudan and Sudan. The extension of the transport corridor to Douala in Cameroon has the potential of becoming one of the most vibrant land-bridges in the world which will provide a seamless flow of container traffic in a shipping logistics chain.
• Its equatorial position places the project half way between the Suez Canal and Cape Town while its meridian position places it well between the Western and Eastern hemispheres. In the long term, the Corridor will interface with the other proposed transcontinental corridors.
• The components of LAPPSET include: –

• Lamu Port with 32 Deep Sea Berths,
• Standard Gauge Railway,
• Highway,
• Crude oil pipeline,
• International Airports,
• Resort Cities and
• Merchant Oil Refinery at Lamu.

• These components provide investment opportunities for the discerning investors. The components have showed great economic viability with most of them registering High Economic Internal Rates of Return of between 17% and 24% – against the accepted industry minimum standard of 10%.
• The LAPSSET Corridor Project requires a total of US$24.5 Billion to implement. It is estimated that Lamu Port with its 32 berths will cost approximately US$ 3.1 Billion, the Railway US$ 7.1 Billion while the Crude oil pipeline will cost a further estimate of US$ 3 Billion for Lamu to Lokichar trunk line. These are substantial amounts of resources that require collaborative approach between the Government and Investors in order to implement the projects successfully.
• I am therefore glad that the MOU between Kenya and the U.S. provides a mechanism to guarantee the bankability of these projects so as to facilitate the much needed private sector involvement.
• I take this opportunity to reiterate our keenness to partner with you on LAPSSET, as well as many other transformative infrastructure PPP projects that Kenya is planning to undertake.

• I re-affirm the commitment of the Kenyan Government towards maintaining a business friendly environment and to provide the necessary support and safeguards to investors, both domestic and foreign.
• We need to strengthen the base of our economic cooperation through business alliances. That is why forums such as this one are essential because they provides an opportunity for business leaders to meet, network and discuss beneficial partnerships of mutual interest to all of us.

I THANK YOU.