How the U.S. lost: A quick overview of China’s fast growing foothold in Africa

STRATEGY: Early 2018, the Chinese Foreign Minister Wang Yi took a trip to several African nations to promote cooperation...and it paid off. Page 12

WWW.CONSTRUCTIONKENYA.COM NAIROBI, KENYA JUNE 2019

Israelis face jail over Kenya roads tender bribery • FULL REPORT, PAGE 4

In 2015, Narendra Raval featured in the Forbes ranking of Africa’s top 50 richest people with his fortune estimated at Sh40 billion at the time . FILE I.M Pei, 102, moves into his heavenly mansion The epic rise of cement • FULL REPORT, PAGE 18 tycoon Narendra Raval village of Mathak in Gujarat, In- BY JUDY MWENDE PROFILE: Devki Group founder is one of Kenya’s dia, Raval moved to Kenya as a teenager to serve as a priest’s as- Narendra Raval does not need most successful entrepreneurs and philanthropists sistant in a Kisumu temple. any introduction. The 57 year old But as fate would have it, at founder of Devki Group Limited, Guru, as he is fondly referred a passion for philanthropy that the age of 20, Raval found and How to acquire the which produces cement, steel to by his friends and admirers, is makes him an enviable character married a beautiful young doctor products, and roofing sheets, is completely self-made and has a that any aspiring business person from Thika – a decision that saw first 20 customers without a doubt one of Kenya’s combination of ruthless business can learn from. him abandon priesthood. for your start-up strategies, tactical brilliance, and Born in 1962 in a little-known most successful entrepreneurs. - FULL REPORT, PAGE 7 • FULL REPORT, PAGE 22 2 JUNE 2019 CONSTRUCTION KENYA PAGE TWO What’s Inside... Israeli business executives face jail over Kenya roads tender bribery Israel’s richest woman, Shari Arison, and several Israe- li business executives have been charged by the police with an elaborate bribery and fraud scheme crafted to win contracts in Kenya. Page 4 Planned dualling of Eastern, Northern bypasses in top gear The planned expansion of Eastern and Northern By- pass roads in Nairobi is moving closer to becoming a reality, with the government inviting Kenyans to sub- mit their views on the project. Page 5 The epic rise of cement, steel tycoon Narendra Raval Narendra Raval, founder of Devki Group, which pro- duces cement, steel products, and roofing sheets is without a doubt one of Kenya’s most successful entre- preneurs and philanthropists. Page 7 The local real estate sector posted a growth of 2.78 per cent in the first quarter of 2019. FILE How U.S. lost: Focus on China’s fast growing foothold in Africa Now the second largest economy in the world, China Real estate growth now slows is playing an important role in the world’s economic affairs and development, especially in Africa. Page 12 to weakest pace in five years Hong Kong plans to build massive BY JANET MUTEGI artificial islands for its citizens also due to would-be-buyers experi- The Central Bank of Kenya’s enya’s real estate growth encing very limited access to cred- Quarterly Economic Review re- The Lantau Tomorrow Vision project involves reclaim- slowed to a five-year low in it,” Johnson Denge, Cytonn Invest- leased in December shows that real ing 17 square kilometres of land off the coast of Lan- Kthe first quarter of this year ments senior manager for regional estate recorded the highest growth tau, Hong Kong’s largest island. Page 16 due to sluggish demand for homes markets told the Business Daily. in non-performing loans in three amid constrained credit access to Mr Ndege, whose company is months ended June, a situation both buyers and developers. undertaking real estate develop- that has seen a spike in the asset Data from the Kenya Bankers As- ments countrywide, said the sector seizures by aggressive lenders. Payment of pending bills to boost sociation (KBA), covering January is experiencing an oversupply in the Non-performing loans (NPLs) in fortunes of construction sector to March 2019, indicates that the high end market segment, adding the sector rose by Sh6.1 billion, or property sector recorded a growth 15.8 percent in April-June to Sh44.4 Local contractors have been featured among the biggest of 2.78 per cent – its slowest rate billion compared to the previous defaulters of bank loans as late payment culture continues since the 1.55 per cent recorded in quarter as property developers out- to take its toll on the construction sector. Page 20 the third quarter of 2014. paced manufacturers (11.7 percent) “The price decline during the first and traders (7.3 percent) in growth quarter of 2019 while indicating the of default on loans, the CBK said. sustenance of a general trend ob- served since the second quarter of Lose property 2018 is seen as tentative, and could This means that 11.3 percent of the be a pointer to a depressed market Sh392.7 billion gross loans extend- if sustained,’’ KBA research director ed to investors in land and houses Published by Samscom Media Group Jared Osoro said last month during by commercial banks over the years P. O. Box 26897-00100, Nairobi, Kenya the release of the banking lobby’s were not being serviced as at the Tel:- +254 (0) 20 211 29 89 / 0708 858 723 House Price Index. end of June. A loan is considered non-per- Feedback: Huge promotions forming if it remains unserviced for The editor welcomes readers’ responses to all articles During the quarter, sluggish de- more than three months. and editorials. Please send your comments to: editor@ mand forced some builders to offer Promotions As a result of financial difficul- constructionkenya.com. Kindly include your contacts. huge promotions to entice buyers, ties, a huge number of investors including freebies and lower down Some developers are offering huge have lost their properties to cred- discounts to entice elusive buyers Advertising: payments. itors – leading to a glut of repos- [email protected] Interestingly, some developers sessed homes that are being sold off also slashed prices as much as 30 cheaply across the country. Corrections: per cent, angering earlier buyers that developers must now look at Non-performing loans (NPLs) in Construction Kenya endeavours to get everything it publishes who paid higher prices. new pockets of value to survive. the sector rose by Sh6.1 billion, or correct. When mistakes are made, we want to know, and a Market analysts blame the slow- “We have seen oversupply in are- 15.8 per cent in April-June to Sh44.4 correction will be published. Please send any corrections or down on low access to credit, un- as such as office space, upper-limit billion compared to the previous comments to: [email protected]. certainties in building approval residentials and in retail space… quarter as developers outpaced laws, and a weakening purchasing Demand has slowed down and de- manufacturers (11.7 per cent) and Design & Production: power among potential buyers. velopers will have to look for new traders (7.3 per cent) in growth of Samscom Media Group, Nairobi. “Demand is both constrained by pockets of value, especially in the default on loans, official data from oversupply in some segments and lower end of the market,” he said. the Central Bank of Kenya shows. CONSTRUCTION KENYA JUNE 2019 3 4 JUNE 2019 CONSTRUCTION KENYA NEWS ANALYSIS Israelis face jail over Kenya roads tender bribery

CORRUPTION: Business executives bribed senior public officials in Africa in an organised fashion, in order to increase the company’s profits

BY J-WIRE AND CK REPORTER deadlines for the project. Shikun & Binui said in Febru- srael’s richest woman, Shari ary 2018 that four current and Arison, and several Israe- former employees of a foreign Ili business executives have subsidiary had been detained been charged by the police with for questioning by Israeli police an elaborate bribery and fraud on suspicion of bribery in Ken- scheme crafted to win contracts ya and other African nations. in Kenya. SBI, which is one of the larg- The police recently an- est construction firms in Israel, nounced that the Lahav 443 has been bidding for other lu- Unit, which deals with fraud crative construction projects in investigations, and the Israel Kenya. Bribes totalling tens of millions of U.S. dollars were paid. FILE Securities Authority have com- The police suspect that be- pleted the probe into Case 1445, tween 2008 and 2016, Shikun & conducted two investigations concluded that there is substan- years of ownership. which deals with the suspicions Binui Ltd. paid bribes to foreign which culminated with arrests tial evidence against a number Her lawyers had earlier said of the transfer of bribery pay- public employees in Africa in an in Nairobi and the questioning of senior workers for offenses in a statement that they were ments to foreign public employ- organized fashion, in order to of 19 Kenyan public workers. involving the bribery of a for- certain that the state prosecu- ees in various African countries, increase the company’s profits. The probe turned the heat on eign public worker, falsification tor, after examining the case, and in Kenya in particular, by those who served at the helm of of corporate documents, con- “will reach an informed conclu- Shikun & Binui Ltd., previously 50 suspects the Transport and Infrastruc- spiracy to commit international sion that there was no flaw in owned by Arison. The investigation began in Feb- ture ministry at the time the crime, disruption of legal pro- Shari Arison’s conduct.” The company allegedly paid ruary 2018, when senior per- suspect contracts were award- ceedings, breaching of the pro- Transparency International the bribes directly or through sonnel of Shikun & Binui, both ed, for allegations of presiding hibition of money laundering, recently lamented that bribery other companies, including via previous and present employ- over corrupt practices. and misleading reporting with of Kenyan officials has over the AG SBI, a Swiss private firm ees, were detained while the po- According to the evidence the aim of misleading a reason- years continued unabated, part- owned by Shikun & Binui. lice searched offices, and seized collected, in Kenya alone in able investor under the Securi- ly because foreign governments The firm works in Kenya documents. which the investigation fo- ties Law. are not enforcing existing an- through its subsidiary Solel The police noted that the in- cused, bribes totalling tens of ti-bribery laws. Boneh International Holdings vestigation was extensive and millions of shekels were paid, Controlling interest “While China has criminal- (SBI Holdings). complex and involved hundreds which generated benefits worth The investigation file will be ised the bribery of foreign pub- SBI Holdings is the company of investigative activities in Is- hundreds of millions of shekels. forwarded to Israel’s State At- lic officials, in line with obliga- that Nairobi picked to build the rael and around the world. The total sum that had been torney’s Office for review and tions under the UN Convention World Bank-funded Mau Sum- A total of 50 suspects were illegally connected to the inves- a final decision, the police con- against Corruption, there has mit-Kericho-Kisumu Highway questioned and testimonies of tigation amounted to an esti- cluded last month. been no known enforcement at a cost of Sh14 billion in 2010. 34 witnesses were taken. Par- mated Sh11.8 billion. Ms Arison sold off her con- against foreign corrupt prac- The company was, however, allel to the open investigation, Upon completion of the com- trolling interest in Shikun & tices by its companies, citizens accused of missing completion the EACC and the Israel Police plex investigation, the police Binui Limited last year after 22 and or residents,” the TI said. How crooks siphon off roadworks billions

BY JANET MUTEGI off the radar of investigating is a shell company that is retary. The CS writes to the authorities. owned by a foreign company ambassador of the respec- Corrupt civil servants and “A company bribes mem- that has neither an office nor tive country, who then writes influential businessmen are bers of a tendering commit- a single employee,” Mr Haji to his/her country’s AG. The teaming up with foreign ten- tee to win a contract, after added. AG writes to the respective derpreneurs to start shell which they deliver substand- The DPP said that investi- DPP who then moves to companies that are used to ard goods or services,” Mr gating fraud cases involving court to ask for consent to fraudulently obtain govern- Haji said during a city meet- foreign companies is a tough investigate the suspect,” Mr ment tenders, it has now ing with religious leaders duty mainly due to the lack Haji says. been revealed. last month. of enough evidence. However, the DPP says he Director of Public Prose- “On follow-up, you find “Investigating foreign en- is devising a new strategy to cutions (DPP) Noordin Haji that the company is owned tities is not easy. The DPP rein in corrupt individuals says corrupt officials are -re by three individuals. The writes to the Attorney Gen- who have made it difficult cruiting foreigners into their first director is a Kenyan, the eral (AG) of Kenya, who for the government to move web of crime as part of a second director is a foreign- subsequently writes to the forward with plans for mega Tender bribery is quite rampant in Kenya. FILE well-crafted strategy to get er, while the third principal Foreign Affairs Cabinet Sec- projects across the country. CONSTRUCTION KENYA JUNE 2019 5 ECONOMY & POLICY Planned dualling of city bypasses in top gear

TRANSPORT: The Sh40 billion project aims and that’s why we’re processing ting the stage for a new round these MOUs.” of fundraising for the 31-kilo- to ease traffic congestion that has become a The documents, he said, will metre road project. perennial headache on the two major highways provide the roadmap for the “We are looking forward to design and costing of the mul- getting funds from prospective ti-billion-shilling project that financiers. We hope the pro- has a two-year construction ject together with the Eastern BY JOY MAKENA dualling that will see the two timeline. Not much has hap- Bypass construction will cost roads with two lanes each in- pened since. between Sh30 billion and Sh40 he planned expansion of creased to four lanes,” it said. The project was among 11 billion. This should be sorted Eastern and Northern The 52km highway project, major infrastructure ventures out in the next three months,” TBypass roads in Nairobi which is under by the Kenya that Kenya showcased to inter- Mr Macharia said. is moving closer to becoming a Urban Roads Authority, starts national investors during the The Northern Bypass, which reality, with the government in- at City Cabanas through Ruai preparing MOUs that would be Belt and Road forum that was is already motorable, is one viting Kenyans to submit their towards Ruiru passing over Thi- shared with shortlisted contrac- held in Beijing, China, in May the government’s key projects views on the project. ka Road to Ruaka where it joins tors “in two or three months’ 2017. aimed at transforming Nairobi In a notice last month, the the Northern Bypass. time” to help unlock financing The bypass was designed and into a regional business hub. National Environment Manage- The project aims to ease traf- for the project. built by the Kibaki-government The road starts from Ruaka ment Authority gave citizens up fic jam that has become a peren- “Dualling should have been as part of Kenya’s Vision 2030 on Limuru Road, overpasses to June 24 to comment on the nial headache on the two roads. done from day one. They should infrastructure projects. Banana Road through Runda project that is expected to cost Dualling of Northern and not have done that road with- In January 2018, Sinohydro and Thome estates. The by- taxpayers up to Sh40 billion. Eastern Bypass appeared immi- out dualling it,” Mr Macharia Limited of China signed a com- pass then proceeds to Kahawa “Nema has received an envi- nent in September 2017 when said. “We want to accelerate mercial agreement with Kenya West and eventually to Ruiru, ronmental impact assessment Transport secretary James the dualling and have it done to undertake the dualling of the through Kamae, where it joins study report on the proposed Macharia said his ministry was as soon as we arrange financing Nairobi Northern Bypass, set- the Eastern Bypass. Botched airport deal now returns to haunt the State

BY JOHN NDUIRE Johnny Andersen told Parlia- ment last month that the Chi- hree years after the State nese firm’s claim has not been cancelled plans to build a verified and that the authority TSh56 billion terminal at is actually seeking a Sh4.3 bil- the Jomo Kenyatta Internation- lion refund from the contractor. al Airport in Nairobi, a Chinese “My position as custodian of firm hired to undertake the pro- KAA who came to clean this il- ject is demanding Sh17.6 billion legal contract is that I want the for breach of contract. money paid to the contractor The New Mitihani House in South C, Nairobi. COURTESY ACEG-CATIC JV, which was back. But the contractor’s posi- to undertake construction of tion is quite opposite and there- fied works stood at Sh891.3 mil- the Greenfield Terminal, is de- fore the need for negotiations,” lion representing 59 per cent of manding Sh17.6 billion from the Mr Andersen told the Public In- the original contract sum,” he Kenya Airports Authority – an vestments Committee. Puzzle of Nairobi’s said, adding that Knec did not amount which, together with The Greenfield Terminal ten- explain the mismatch between the Sh4.3 billion it had received der was cancelled in March 2016 oldest construction site the certified level of works and by the time the contract was – two years after its ground- level of project completion. cancelled, raises its total claim breaking – following Kenya’s The council, which is report- to Sh21.9 billion. failure to raise 15 per cent of the BY CK REPORTER through the hands of sever- edly facing some tough cash The firm wants KAA to pay project cost, which would have al builders appeared to be on flow challenges, is yet to hire a Sh2 billion for the preparation unlocked the remaining 85 per The Kenya National Exami- track in 2013 when the council new contractor. of bill of quantities, Sh2.4 bil- cent budget that was to be pro- nations Council’s New Mitihani hired M/s Ongata Works Lim- “With the cancellation of the lion in extra costs, and Sh708.2 vided by a consortium of local House in Nairobi’s South C Es- ited to complete the project in contract, management risks le- million value added tax charged and foreign banks. tate has been under construc- a deal sum valued at Sh1.49 bil- gal suit from the contractor and by Kenya Revenue Authority. The 178,000 square metres tion for the last 30 years, earn- lion for 78 weeks - which was this may further delay the com- The contractor is demand- terminal, which was launched ing itself the title of the city’s later pushed to March 2017. pletion of the project,” Mr Ouko ing an additional Sh5.6 billion, by President Kenyatta in De- oldest construction site. However, the work stalled at said in a statement. which includes the balance of cember 2013, would have given How the building, which 59 per cent forcing Knec to ter- The auditor said the coun- the contract for the bill of quan- JKIA an extra handling capacity was meant to house Knec head- minate the contract. – a move cil did not provide a road map tities, value added tax, and in- of 20 million passengers a year. quarters, has remained under that Auditor-General Edward on how it intends to complete terest and penalties. It would have included 50 in- construction for three decades Ouko says will cost taxpayers the project, warning that delays KAA is on its part demanding ternational check-in counters, despite numerous budgetary more money. in completion would lead to back the Sh4.3 billion that had eight air bridges for aircraft to allocations remains a puzzle to “As at June 30, 2018, the cost escalation, a situation that been paid to ACEG-CATIC JV. dock, 45 aircraft parking stands, many observers. council had paid Sh818.3 mil- would deny stakeholders value The KAA managing director and an additional runaway. The building that has gone lion net of retention while certi- for their money. 6 JUNE 2019 CONSTRUCTION KENYA ECONOMY & POLICY How cartels disrupt projects to make a killing

THEFT: Shady deals firm that has made the head- lines for delayed projects. The enable firms to earn Kenya Urban Roads Authority more for delaying (Kura), and the Kenya National Highways Authority (KeNHA), projects than when among many other parastatals have also been in the same pre- working on schedule dicament, mostly due to land compensation conflicts. BY JUDY MWENDE These squabbles, which are said to be designed long before ogue contractors are con- a project gets underway, have niving with corrupt gov- over the past years resulted in Rernment officials to de- a huge backlog of infrastructure vice schemes where companies ventures – and hefty compensa- make more money for delaying tion bill to foot. projects than when they com- “Unless this fraudulent activ- plete them as scheduled. ity is checked, we will continue In a practice that is appar- throwing our taxpayer money ently rife in many government into a bottomless pit,” an official parastatals, public officials hire at the Ministry of Transport and a contractor to undertake a pro- Infrastructure told CK in an in- ject - in a deal that allows the terview. contractor to ask for compensa- A silhouette of project managers at a construction site. FILE Some of the key projects that tion in case of delays originat- have experienced lengthy delays ing from the government. of Criminal Investigations in- by four years. The contractor courages the contractors to de- include the Eldoret bypass, Tur- Once the deal is sealed, the itiated investigations into the had asked for Sh3.8 billion. lay works as they would benefit kana-Suswa power transmis- officials work hard to ensure operations of the Kenya Elec- “The total claim per month more from the delays,” reads an sion line, Dongo Kundu bypass, that the timelines are breached tricity Transmission Company for idling and overhead is much audit report on the company. High Grand Falls Dam, among – whether by withholding fund- (Ketraco) after it emerged that higher than what the contrac- Auditors criticised Ketraco many others. ing for the project, politicising the company paid nearly a bil- tor would be paid in a month for admitting the claims that Construction of the Nairo- land compensation processes, lion shillings to a contractor for (labour costs) working at full were exaggerated and required bi-Naivasha standard gauge or by obtaining injunctions – in idling and overheads. potential (100 per cent) and ex- the company’s management to railway has also faced some de- a well-coordinated operation The company is said to have ceeds the 0.5 per cent per week explain why the contractor had lays due to land compensation that sees contractors winning paid Kalpataru Power Trans- liquidated damages the employ- to retain its idling workforce for disagreements but the govern- hefty compensation for idling. mission a total of Sh964.5 mil- er can charge due to delays. 21 months and get paid Sh108 ment has been taking quick Early this year, for example, lion after the Mombasa-Nairobi “The rate is therefore puni- million every month. measures to forestall the derail- sleuths from the Directorate power line project was delayed tive to the employer and en- Ketraco is not the only State ment of the project.

from banks and utility provid- ers was instrumental in identi- KRA finds a new fication of the landlords,” KRA said in a statement, adding that it was targeting to recruit 22,000 landlords into the tax way to capture base by December. As at June 2018, the taxman had recruited 58,934 landlords. KRA also plans to conduct a dodgy landlords nationwide mapping of rental property to ascertain locations, sizes and ownership of proper- BY MIRIAM NKIROTE “Records held in this office ties as a means to enforce re- indicate that you own rental mittance of rental income tax. sizable number of land- property and you have failed to While these efforts are smart lords who have not declare the rental income from ways to improve revenue col- Abeen remitting rental your property as required of lection, tax experts warn that income tax to the Kenya Reve- you under the law. the initiative could create more nue Authority (KRA) have been “Please note that the amounts resistance from landlords who slapped with hefty tax demands assessed are due and payable will quickly find other means to following the taxman’s decision immediately. If you fail to com- dodge the taxman. Rental income tax was introduced by the Finance Act 2015. FILE to scrutinize Kenya Power’s ply with this notice within a pe- These unorthodox measures meter register to identify and riod of 30 days from the date of been sending spies to rental could include informal access smoke out defaulters. this notice, tax recovery meas- houses to gather information to utilities such as water and BACKGROUND KRA has singled out individ- ures may be instituted without from residents and custodians electricity to hide personal uals with many power meters any further reference to you,” Why KRA is yet to who unknowingly divulge own- data from the KRA, says Sam- listed under their names, for reads the demand letter. launch national wide ership details, rental rates, and uel Mwaura, a tax partner with whom it has approximated tax- KRA is using meter location number of houses – particulars Grant Thorton. es due during the period when to identify the site of a property mapping of rentals that are then used to estimate The rental income tax, which the meters have been active. while the amount of electricity rental income and payable tax. was introduced by the Finance A letter seen by CK has given consumed is used to estimate •While KRA plans mapping of The authority had in Janu- Act 2015, is charged at a flat rate one landlord just 30 days to set- the size of the house. These de- rentals as a means to enforce tax ary said it would use utility bill of 10 per cent of the monthly remittance, the exercise is viewed tle a Sh4.8m tax demand, failing tails are used to estimate the as costly and time consuming. data from third parties to catch rent earned, and it targets prop- which tax recovery measures rental income and tax payable. dodgy landlords. erty owners receiving less than will be instituted immediately. In some instances, KRA has “Access to third-party data Sh10 million a year. CONSTRUCTION KENYA JUNE 2019 7 TOP STORY The epic rise of cement tycoon Narendra Raval PROFILE: Devki Group founder is one of Kenya’s most successful entrepreneurs and philanthropists

BY JUDY MWENDE small room in Gikomba market from where he set up a small arendra Raval does not hardware store. need any introduction. “I ran the business with my NThe 57 year old found- wife. As the business started er of Devki Group, which pro- picking up, I saw an opportu- duces cement, steel products, nity for manufacturing moder- and roofing sheets (with nearly ately-priced roofing and fencing Sh100 billion annual revenues) solutions. I went to the bank is without a doubt one of Ken- and discussed my plans with ya’s most successful entrepre- them, so they gave me a loan neurs and philanthropists. and they supported me,” he Guru, as he is fondly referred said. Devki Group founder and chairman Narendra Raval. FILE to by his friends and admirers, In 1992, Raval established a is completely self-made and has small steel rolling mill in Athi clinkering plant at Simba town while shortening the distances Dangote Cement would clinch a combination of ruthless busi- River. His idea was to break the in Kajiado. Devki Group runs covered by lorries delivering the a buyout deal for the company ness strategies, tactical bril- monopoly of a company that steel-making factories in Ruiru material to construction sites. that is seeking to pay down its liance, and a passion for philan- was exploiting Kenyans by ri- and Athi River. “When we launched our op- mounting pile of debt. thropy that makes him an envi- diculously pricing its steel bars, Its subsidiaries include Mai- erations six years ago, our goal It came barely two months able character that any aspiring roofing materials, and other sha Mabati Mills Limited, Devki was to reduce the cost of hous- after Raval disclosed that he business person can learn from. building materials. After years Steel Mills Limited, National ing and it is being realised as was in the final stages of ac- Born in 1962 in a little-known of tough completion, and price Cement Limited (Uganda), and I have managed to offer qual- quiring Sanghi Cement’s assets village of Mathak in Gujarat, In- cutting from the monopoly, Northwood Aviation Limited. ity cement at Sh550 ex-factory in West Pokot, after it failed dia, Raval moved to Kenya as a Raval finally found victory – In 2017, Raval disclosed his compared to the then market to raise funds to build its long teenager to serve as a priest’s with his small factory evolving plans to set up two cement fac- price of Sh700 per 50-kilo- overdue factory. assistant in a Kisumu temple. into Devki Group, which now tories in the country in a bid to gramme bag before our entry,” But even as he continues to But as fate would have it, at employs over 4,000 people. boost sales by lowering prices of Mr Raval said. stride the regional business the age of 20, Raval found and the commodity. On May 21, ARM Cement an- scene like a colossus, Raval re- married a beautiful young doc- Richest people The first plant, which has the nounced it had signed a deal to mains true to his philanthropic tor from Thika – a decision that Raval, now a Kenyan citizen, capacity to produce 750 mil- sell all of its local assets to Devki nature. In addition to spending saw him abandon priesthood. was in 2015 featured in Forbes lion tonnes of cement annually, in a Sh5 billion transaction that millions of shillings annually “Once you get married you Magazine ranking of Africa’s will be located on a 20-hectare will help the latter become the on scholarships, he has pledged are not allowed to serve in the top 50 richest people with his plot in Mariakani, Kilifi Coun- second largest cement maker to donate half of his wealth to temple. So I had to leave. When fortune estimated at Sh40 bil- ty, while a second plant of an in the country after Bamburi – charities in health and educa- I left the temple, I had to find a lion at the time. equal capacity will be located in further raising Raval’s fortune tion, as well as social programs means of earning income, so in His company boasts sever- the Rongai township of Njoro and business profile. to help the less fortunate mem- 1982 I took up a job at a hard- al subsidiaries in Kenya and sub-county in Nakuru. bers of the Kenyan society. ware shop and steel mill in Nai- Uganda, and is ranked among Each of the two plants will be Speculations “I will keep 50 per cent for robi,” Raval said in a 2015 inter- the biggest building materi- built at a cost of Sh3 billion. The surprise deal, which is my children and the other 50 view with Forbes. al producers in East Africa. It According to Raval, the two subject to receipt of regulatory per cent will go to charity in In 1990, when his employ- owns a cement grinding plant cement plants will help to fur- approvals, brought to an end Kenya,” Raval said in a recent er closed shop, Raval rented a in Lukenya, Machakos, and ther lower the price of cement, months of speculations that television interview. How Devki beat Dangote in battle for ARM

BY JANET MUTEGI of speculations that Dan- with the troubled company. tive to its receiver managers gote Cement would clinch a Raysut Cement Company, who preferred splitting the On May 21, ARM Ce- buyout deal for the company Oman’s largest cement mak- struggling giant to gain the ment PLC announced it had that is seeking to pay down er, had also made an offer to highest value. signed a deal to sell all of its its mounting pile of debt. buy ARM for Sh10.2 billion Unlike Devki, Dangote local assets to Devki Group’s Dangote Cement, which as part of its strategy to be- wanted to acquire the en- National Cement Limited is owned by Aliko Dangote, come a key player in the East tire business, while Raysut in a Sh5 billion transaction was last year approached African cement business. placed a bid for a 70 per cent that will help the latter be- by ARM for a potential deal Although it was widely stake in the company. come the second largest ce- that would have offered the expected that either Dan- In 2017, Devki Group ment maker in the country Nigerian firm an easier en- gote or Raysut would clinch chairman and founder Nar- after Bamburi. try into Kenya. the deal, insiders say that endra Raval disclosed his The surprise deal, which The proposal enticed Mr Devki’s proposal to acquire plans to set up two cement is subject to receipt of req- Dangote, who told Bloomb- ARM Cement’s assets in factories in the country in a uisite regulatory approvals, erg in November that he was Kenya (a small portion of bid to boost sales by lower- ARM Cement factory in Nairobi. FILE brought to an end months discussing a takeover deal the business) proved attrac- ing prices of the commodity. 8 JUNE 2019 CONSTRUCTION KENYA CORPORATE UPDATES

HOUSING DEVELOPMENT Indian firm inks deal with Actis to build 600 houses in Nairobi

BY JOY MAKENA 400 homes for the middle class. The entry of Shapoorji Pallon- hapoorji Pallonji Real Es- ji into the local real estate scene tate, the property develop- comes at a time when a sub- Sment subsidiary of Indian stantial number of global inves- multinational Shapoorji Pallonji tors are expressing their desires Group, has entered the Kenyan to take part in an ambitious housing market with plans to set State-backed affordable hous- up a new multi-billion shilling ing scheme that seeks to deliver estate in Nairobi. up to a million low-cost houses The yet-to-be named project across the country. at Nairobi’s Garden City Mall on The government, which will Thika Road will be developed provide parcels of land to devel- through a Sh12 billion fund es- opers who will then prepare site tablished by Shapoorji Pallonji and architectural plans for the and its joint venture partner Ac- identified projects, is fronting A Sany front wheel loader dumps dirt. FILE tis. the use of precast wall panels The joint partners will devel- and pillars as a means to expe- op some 600 apartments, which dite the project. will be sold to prospective buy- ers for a price range that will be Generous incentives Sany sees bright future in dislosed later. Although the terms of funding “We are delighted to partner are yet to be made public, it is with Actis in the African residen- believed that the Kenyan gov- tial market. This venture marks ernment has handed out gener- Kenya equipment market the continuation of a journey ous incentives to lure some of for Shapoorji Pallonji Real Es- the world’s top financiers into tate in the sub-Saharan African the scheme. Region,” Shapoorji Pallonji Real Shapoorji Pallonji had earlier SHOWROOM: Chinese firm has opened a showroom in Nairobi Estate CEO Venkatesh Gopalkr- partnershed with Indian mul- ishnan said in a statement. tinational Tata Group to build to capitalise on the growing popularity of its products in East Africa “There is a huge demand thousands of low cost homes in for affordable and middle-in- various towns of Kenya but the come homes and the goal of the venture failed to take off after BY DANSON KAGAI years in a move that will ele- joint-venture platform will be the two partners failed to obtain to bridge the gap in this market free land for the project. vate the Chinese firm to num- QUICK FACTS any Group, a Chinese ber one vendor of concrete ma- and to exceed customers’ expec- In March 2018, the company heavy equipment man- chines and second best seller of Sany, Rhombus tations.” disclosed that it had for the past Sufacturer, has opened dump trucks in Kenya. C.C. deal in figures year pleaded with county and a showroom in Nairobi as it “Rhombus shall absorb SA- Affordable homes national government officials for seeks to capitalise on the grow- NY’s advanced IROOTECH sys- Sh5bn Actis Global Head of Real Es- free land but no one had so far ing popularity of its products in tem and open hotline to update Sany signed a Sh5 billion deal tate David Morley said the two agreed to the proposal. with Rhombus Construction partners had undertaken simi- “Tata Value Homes planned to the East African market. the service quality; shall build to sell its products locally. The showroom that is locat- workshop and exhibition hall lar projects in India, where they establish green townships near ed on Mombasa Road displays according to SANY’s standard; 200 have delivered thousands of cities in Kenya and we held talks a range of machinery on offer, at the same time, shall take The number of concrete high quality affordable homes. with several county governments including mixer trucks, excava- over SANY’s parts warehouse machines that Sany hopes to sell “Actis and Shapoorji Pallonji that showed willingness to part- in Kenya in the next three years. tors, concrete machinery and in Kenya and make plan to set in India have delivered thou- ner with us but none is willing tipper trucks, among others. up reliable parts store for exist- 650 sands of high quality, aspiration- to part with land,” Shapoorji Pal- The new showroom comes ing and new clients,” SANY said The number of dump trucks al homes at affordable prices. lonji’s Ajay Anand said in an in- shortly after the firm signed a in a statement. that Sany hopes to sell locally We are confident that Actis terview the Business Daily. deal with Rhombus Construc- Headquartered in Chang- over the next three years. investment experience in Africa He said the Indian multina- tion Company to sell its prod- sha, China, SANY is the world’s coupled with Shapoorji Pallonji’s tional was willing and ready to ucts locally in a contract valued fifth-largest heavy equipment experience in construction and apply “affordable technology to at around Sh5 billion. maker. It is the first in its in- ator survived the incident be- real estate development will un- deliver thousands of homes for The two partners are seek- dustry in China to enter the FT cause of the sound protection lock the significant opportunity,” low-income earners.” ing to raise their share of the Global 500 and 2000 rankings. from the reinforced structure Mr Morley said. According to the official, the lucrative equipment market in The company is renowned of the excavator. Actis is the developer of Gar- two companies were keen to the country, “with the resultant locally for its range of ‘green Rhombus chief executive den City Mall, a mixed-use de- build affordable homes in Ken- effects of creating more job op- mamba’ excavators that fea- Evanson Githinji recently ap- velopment that features retail, ya on a tenant purchase scheme portunities, training for engi- tured prominently in the re- plauded SANY for its high qual- residential and office space. that will revolutionise the coun- neering students and the acqui- cent demolition drive to rid the ity machinery that has stood The private equity firm is cur- try’s mortgage market that cur- sition of affordable equipment,” country of illegal structures. the test of time in terms of safe- rently building a Sh54 billion rently boasts less than 30,000 according to Victor Marangu, During the operation, a ty and efficiency. business park adjacent to Gar- borrowers. head of sales and marketing at SANY excavator withstood the “SANY has extreme pursuit den City Mall. “We are ready to partner with Rhombus Construction Co. collapse of a structure that was to its products’ quality, which The new facility offers about local banks in the housing pro- Sany hopes to sell 650 dump under demolition – with only not only can improve products’ 25,000 square metres of office jects but the government needs trucks and 200 concrete ma- the cab’s glass breaking. performance but also safeguard space, a healthcare facility, two to come up with incentives that chines locally in the next three The company said the oper- operators’ safety,” Githinji said. four-star hotels and more than spur mortgage uptake,” he said. CONSTRUCTION KENYA JUNE 2019 9 10 JUNE 2019 CONSTRUCTION KENYA OPINION & COMMENTS

Uhuru’s directive to settle pending bills highly welcome

EDITORIAL from bad loans provisions. As a result, some local con- REVIEW & OUTLOOK tractors are moving away from state-backed projects – in fa- resident Uhuru Kenyatta’s vour of undertakings that are directive to national and funded by development agen- Pcounty governments to cies in an attempt to avoid pos- immediately settle all pending sible cash flow crisis. bills that do not have audit que- For instance, H Young & Com- ries is a welcome relief to the pany Ltd., one of Kenya’s largest construction industry. engineering contractors, dis- Official data shows that -na closed in a 2015 report by Glob- tional government, counties al Credit Ratings that it was and large corporate players owe mitigating late payment risks traders more than Sh310 bil- by “targeting projects that are “After you left the office yesterday saying that you had to go to your grandma’s lion, with the national govern- development agency funded or funeral, she called the office looking for you.” ment leading at about Sh250 contracts for high credit qual- billion (80 per cent). ity international engineering Most of these monies are companies, and private sector owed to contractors who have industrial companies.” been contracted to set up req- This is quite unfortunate es- uisite infrastructure in various pecially coming at a time when Sorry, there is no magic solution parts of the country. the government is embarking Many contractors who sup- on an ambitious housing devel- plied goods and services to the opment scheme that requires to Kenya’s affordable homes crisis national and county govern- heavy funding from banks. ments have remained in a fix The president’s pronounce- A blend of factors has made Lengthy and high cost of following an earlier directive ment is therefore a timely ges- owning a townhouse a pipe property registration is yet an- that stopped all payments to ture, albeit a little too late for COMMENT dream for most families. It all other contributor to the overall allow investigators to smoke many companies. FELIPE JARAMILLO & JUMOKE JAGUN comes down to the high cost of high cost of construction. out tenderpreneurs who were Meanwhile, as a long-term land, high cost of constructing While the time to register claiming billions of shillings for solution, we support the latest nly 19 per cent of families houses and high cost of finance property has somehow im- non-existing services. suggestion to criminalise late in urban centres across inaccessible to the vast majori- proved, there is a serious issue Due to the lengthy review payment. The proposal, which Kenya live in their own ty of the population. It’s both a with the reliability of titling. of financial records, many con- has been fronted by the Kenya O houses, with the capital Nairo- question of supply and demand. There are cases of multiple per- tractors have been barely sur- Private Sector Alliance makes bi having the smallest share of For the supply side of the af- sons claiming ownership of a viving. Many others have had it mandatory for public institu- homeowners at nine per cent of fordable housing equation, the single title. their date with auctioneers, tions to pay suppliers within 60 the city population. cost of land is unnecessarily High cost of construction while others have closed down days. This is long overdue given Not that town dwellers love exorbitant, driven by frenetic is another hurdle in the path shops completely. the extent to which suppliers renting; the high cost of home- speculative-buying and selling towards unlocking affordable Indeed, the construction in- have suffered in the hands of ownership has simply locked around towns, a situation that housing supply. Construction dustry accounts for the largest organisation that have institu- most of the population out. costs are, on average, 51 percent portion of non-perming loans tionalised a late payment cul- Indeed, Kenya’s residential higher in Kenya than in South that continue to weigh heavily ture. Cases of bills pending for property costs stand above Africa, due to both labour and on local commercial banks. over two years are too common. most African countries. World material cost, along with out- This has seen most commer- This is unacceptable consid- Bank Group studies indicate a dated building codes. cial banks shying away from ering that most suppliers take two-bedroom standalone house On the demand side, the lending to the construction sec- bank loans to meet the require- (55 sqm) on a 120 sqm plot cost of a new home is often de- tor in effort to shield themselves ments of their clients. costs about $65,000 in Nairobi, termined by the interest rate which is 61 percent higher than charged on the loan. in Johannesburg and 19 percent This is in addition to any fur- Apprehend sand Mafia costlier than in Kigali. Kenya’s ther fees charged by the lender higher pricing is the result of to process the loan or mort- Sand mining is increasingly selves – harvesting sand like multiple layers of development gage. The short-term nature of eroding the world’s river del- there is no tomorrow, despite costs piling upon each other. financing is a limiting factor tas and coastlines, damaging the existence of official guide- Developers had previously that can make a significant dif- the environment and hurting lines on how this commodity focused more on building up- ference in affordability, much livelihoods in many parts of the should be harvested. market apartments targeting more than the interest rate it- country as dealers rush to meet Although there is no mag- a few high-income customers self. the rising demand for the im- ical solution to the looming who can mobilise own cash or The longer period given to portant building material. sand crisis, global experts are qualify for mortgages matching the borrower to settle a long- This has increased water now calling on the world gov- prevailing housing prices. term mortgage repayment has pollution, worsened the risk ernments to make and enforce Starved of decent, affordable has long gone unchecked. Tied the effect of lowering the in- of flooding, while lowering rules to regulate the mining of housing units, lower income to the price of land is the high come eligibility threshold need- groundwater levels. It has also the granular material. households in urban areas find cost associated with servicing ed for banks to underwrite the hurt marine life and exacerbat- It is on this background that themselves pushed by condi- the land, including laying in- home loans, meaning lower in- ed the occurrence and severity we call upon the government to tions into rental accommoda- frastructure like power lines, come households get to qualify of landslides in many areas. rein in these gangs that contin- tion in crowded informal settle- water and sewerage, along with for financing. Most alarmingly, the trade ue to destroy our environment ments. roads. has brought about a gang of as they seek to satisfy their self- With the renewed interest in To help cut prices of land, Felipe Jaramillo is World Bank sand Mafia who kill and maim ish monetary greed. affordable housing as outlined the government should strate- Country Director for Eritrea, individuals who get in the way There is no point of coming within the Big 4 agenda, how gically plan to lay such critical Kenya, Rwanda & Uganda of their illicit business. These up with laws to bring sanity in then can we make homeowner- public utility infrastructure in and Jumoke Jagun-Dokunmu gangs, mostly in Eastern Kenya, the society only for the same ship a more feasible reality for areas of potential residential is IFC’s Regional Director for have become a law unto them- laws to remain unenforced. most Kenyan workers? property development. Eastern Africa. CONSTRUCTION KENYA JUNE 2019 11 OPINION & COMMENTS

TALKING POINT | ANZETSE WERE Here’s how to build long-term supply of affordable houses

nder the Big Four agenda , affordable houses are estimated to cost Sh600,000 to Sh3 million Uwith the Kenya Mortgage Refinance Company established to facilitate the provision of affordable mortgages. However, in the long-term, urban planning by gov- ernment has to take an extended outlook on the devel- opment of urban areas and consistently allocate land designated for housing. All rapidly urbanising counties ought to set land aside and then contract private sector to construct af- fordable homes. This will relieve private developers of the cost and hassle of purchase and transfer of title and, thus, lower costs in the long-term. Secondly, there is a need to lower the cost of the manufacture of construction materials. In addition to “The road to happiness lies in two simple principles; find what it is that interests you and that you can do addressing issues systemic to manufacturing such as well, and when you find it put your whole soul into it.” - John D. Rockefeller (1839–1937) lowering cost of electricity, incentives specific to low- ering cost of locally manufactured construction mate- rials ought to be applied. The Kenya Property Developers Association, which The editors welcomes readers comments on topical issues. Send your letters via email to [email protected]. Letters may be edited for space, clarity and legal represents the residential, commercial and industrial Letters to the editor considerations. Views expressed here are not necessarily those of the editor or publisher. property development sector in Kenya, has an Afforda- ble Housing Taskforce which recommends zero-rating of locally manufactured products used in affordable housing developments. Builders should prioritise solar energy solutions Thirdly, the private sector ought to be listened to with regards to their ideas on how to stimulate their ability to construct affordable housing on a long-term he cost of electricity basis. in Kenya continues In terms of fiscal incentives, KPDA’s Affordable Tto escalate thereby Housing Task force suggests that corporate tax be re- piling pressure on house- duced to 15 percent for approved affordable housing hold budgets. Official projects and that financing spent on infrastructure data released early this linked to affordable housing, be treated as capital ex- month indicate that pow- penditure and set off at 100 percent against the tax er bills reached a historic payable as a capital allowance. high last month, driven With regard to costs linked to regulatory compli- by the monthly adjusted ance, the suggestion is that the government establish- fuel levy that is passed es a one-stop shop for all affordable housing approvals down to consumers. and standardise all construction related fees by county Households that con- governments. sumed 200 kilowatt hour If Kenya is to play the long game in stimulating the (kWh) last month paid Solar panels are a one-time investment. FILE consistent supply of affordable homes, the government Sh4,762, up from Sh4,518 ought to leverage its current focus on the sector and in April and Sh4,178 a determinedly resolve the factors that prevent the pri- year ago. The upsurge is electricity using diesel, are one-time investments experience a huge cut in setting the stage for a rise which continue to serve electricity bills, hence sav- vate sector from effectively servicing this market seg- attributed to last month’s ment. fuel cost levy when elec- in electricity prices. both nature and the socie- ing money. Home builders can eas- ty for a much longer time. Besides, no health haz- In the government addressing the structural con- tricity bills jumped by the straints linked to affordable housing, the private sec- biggest margin in recent ily mitigate these costs In the long run, they ards are involved and no by fitting solar systems turn out to be less expen- pollutants are emitted by tor will be able to more effectively construct homes years on reduced use of that Kenyans can afford on an ongoing basis. cheaper hydropower fol- onto their premises. Un- sive as compared to diesel the systems. like what many people generators or grid elec- lowing poor rains. This article was first published in the Business Daily. The dry spell forced believe, solar systems are tricity. Consumers who PETER MAINA Kenya to generate more very cost effective. They switch to solar energy The writer is a Nairobi landlord It’s time to rein in landlords who clog drainage system Following the onset of the city’s future growth, some estates, they also have to Construction Authority long-rains season, Nairo- unscrupulous developers grapple with dry taps due (NCA) to stop the illegal bi residents are now star- have aggravated the situ- to acute water shortage. approval of buildings on ing at yet another period ation by building on sew- Besides, the encroach- sewer lines and demolish of flooding attributed to er lines – obstructing all ment and blockage of the already existing ones. clogged and poorly pre- rain water runs of estates. waterways by landlords As they say, failing to pared drainage systems. This means that the makes storm water har- plan is planning to fail. Although these issues surface runoff has no- vesting difficult yet the Let us not wait until a can be blamed on systems where to go leading to, at water can be purified for disaster happens so as to that were put in place times, deadly flash floods. domestic use. take action. many years ago without It is frustrating that as City Hall must quickly - Jane Ndunge taking into account the city struggle with flooded liaise with the National Embakasi, Nairobi A housing project in Nairobi. FILE 12 JUNE 2019 CONSTRUCTION KENYA NEWS INDEPTH How the U.S. lost: A quick overview of China’s fast growing foothold in Africa

STRATEGY Early 2018, the Chinese Foreign Minister Wang Yi took a trip to several African countries to promote cooperation...and it paid off in the end

ver the past two decades, the Criminal Justice slashed the budget of People’s Republic of China (PRC) the United Nations by $285 million and Ohas undergone extraordinary boycotted the ‘Intergovernmental Con- economic growth, transitioning from a ference to adopt the Global Compact for low-income economy to an upper mid- Safe, Orderly and Regular Migration.’ dle-income economy and maintaining The ‘America First’ policies are espe- its status as the largest contributor to cially damaging due to the rise of com- global growth. peting countries and alternative value Now the second largest economy in systems. the world, China is playing an increas- For centuries, “modernity” and the ingly important role in the world’s eco- “Western way of life” have been closely nomic affairs and development, not the interlinked, but the dawn of the ‘Asian least in Africa. century’ has created an ever-growing While well-established traditional gap between Westernization and mod- donors like the United States (US) and ernization. the European Union (EU) are pivoting A 2017 Pew Research Center study to confront domestic challenges, China found that enthusiasm for US democrat- is deepening its involvement with the ic ideals has greatly diminished in coun- continent. tries such as Senegal, Ghana, Kenya, and The US is not only falling prey to Tanzania. what Fareed Zakaria termed ‘the rise of The same study also gauged the de- the rest’, but also forfeiting its role in in- gree of confidence in four different lead- ternational fora that do not fit the Presi- ers to do the right thing in world affairs. dent’s agenda. Germany’s Angela Merkel ranked first, China’s Xi Jinping ranked second, Rus- America first sia’s Vladimir Putin ranked third, and In just the first year of his presidency, America’s Donald Trump ranked last. Donald Trump has withdrawn the US As time passes, it becomes increasingly from the United Nations Educational, clear that the current US administration Scientific, and Cultural Organization, has no coherent vision for Africa, and the Trans-Pacific Partnership, and the that US prestige is in decline on the Af- 2015 Paris Agreement. rican continent. He has also closed the Office of Global The US is undergoing a veritable di- plomacy crisis in Africa. Due to obstruction by the Senate, Donald Trump failed to appoint an As- sistant Secretary for the Bureau of Afri- can Affairs within the United States De- partment of State. Since September 2017, Donald Yukio Yamamoto has been acting in this role, guiding US diplomatic operations in sub-Saharan Africa.

Vulgar language This might be the underlying reason why the appointment of new ambassadors to Africa has been so remarkably slow. Of the fifty-five countries on the Afri- The U.S. is undergoing to respond to. can continent with which the US main- veritable a diplomacy His proposed budget-cuts and tains diplomatic relations, only five have crisis in Africa. FILE short-sighted policies have conveyed the seen the accreditation of an ambassador impression of xenophobia and careless- during Trump’s presidency. ness in America’s fragmented foreign Moreover in his first year as President policy towards Africa. of the US, Donald Trump has conducted Meanwhile, China has been building sixteen state visits, but none to African on its legacy of diplomatic engagement. nations. In early 2018, the Chinese Foreign On the contrary, he has created diplo- Minister Wang Yi started a long trip to matic incidents by praising the non-ex- Rwanda, Angola, Gabon, and Sao Tome istent country of ‘Nambia’ and using vul- and Principe (a country that has only re- gar language to describe African coun- cently normalized relations with China) tries and their citizens. to promote solidarity and cooperation. His remarks spurred international In 2017, both Wang Yi and President Unlike the U.S., China sees Africa as a key economic partner. FILE condemnation that the President failed Xi visited countries throughout the con- CONSTRUCTION KENYA JUNE 2019 13 NEWS INDEPTH

investment in African states is the egali- tarian nature of a ‘win-win’ cooperation under the auspices of “South-South Co- operation” (SSC). SSC can be defined as the pursuit of development objectives by enhancing countries’ capacities through exchanges of knowledge, skills, resources and tech- nical know-how, and through regional and inter-regional collective actions. This framing allows China to tran- scend the traditional norms of the OECD’s official development assistance (ODA) and include business-driven co- operation which is not recognized as a form of ODA. As FOCAC explains, “China’s foreign aid policy has distinct characteristics of the times. It is suited both to China’s actual con- ditions and the needs of the recipient countries.”

Grim circumstances This setting serves as a reminder to host countries that China’s financial contri- butions differ from the assistance pro- vided by developed countries. The intentional contrast with West- ern forms of aid and investment is part of China’s strategy to promote its model as the standard for developing countries. The US is failing to spearhead Africa’s economic growth and development. Aid for development was deprior- itized by President Trump, who has threatened to shut down healthcare programs and to reduce funding for the Global Fund to Fight AIDS, Tuberculosis (TB) and Malaria. Moreover, Donald Trump announced his intention to tie aid to countries based on their support to US foreign policy, and cut aid to “countries that hate us”. Under these grim circumstances, countries must shield themselves from aid cuts by becoming Trump’s regional allies. It would be unfair to attribute sole responsibility to Trump for the dysfunc- tional character of US-African foreign policy. The US, even before Trump, has lacked an overarching strategic frame- work for foreign policy in Africa.

Foreign policy The continent has never gained a prom- inent role in America’s global strategy, and strategic interests in Africa have been regarded as secondary. To date, Washington is still struggling to find a balance in its foreign policy and to incorporate African priorities in its vi- sion. What is attributable to Trump is his transactional understanding of aid dis- bursement. In his inauguration speech, the Pres- tinent to call for unity in meeting vari- traditional donor countries – especially But when it comes to evaluating the ident highlighted that he will not “seek ous challenges in the global south. in the cases of post-Brexit United King- volume of Chinese investment and aid, to impose our way of life on anyone, but These strong dialogues that China has dom and Trump’s America. analysts and researchers are confronted rather to let it shine as an example for initiated for the past few years will be According to a 2018 EY report that with a number of ambiguities regarding everyone to follow.” particularly instrumental as the 7th Fo- measures private investment in Africa, the financing of activities. Linking aid to foreign countries’ loy- rum on China Africa Cooperation (FO- China is ramping up the volume of fi- Foreign aid, development finance, alty to the US is a perverse mechanism CAC), to be held in September this year, nancial investment in Africa. and overseas direct investment are con- of retribution for those states who dare approaches. In 2016, China emerged as the lead- cepts that are sometimes interchangea- question the US ‘example’. ing job creator on the continent and the ble, and that do not necessarily reflect Trump should ask himself what ex- Financial investment third largest investor as the number of the nature of the projects they fund. ample his policies are setting; far from In this Ministerial Forum, China and Af- Chinese-funded projects rose by 106%. This is further complicated by finan- being the leading light in global govern- rica will redefine priorities and presum- Overseas financial flows from China cial data being treated as secrets, trans- ance, Trump’s America is appealing to ably strengthen cooperation. into Africa have largely taken the form actions that fly under the radar, and the fewer and fewer developing nations. China’s activities in Africa benefit of development assistance through under-reported volume of investment. greatly from domestic uncertainty in grants and very low-interest-rate loans. However, underlying Chinese aid and - CHINA HANDS MAGAZINE 14 JUNE 2019 CONSTRUCTION KENYA REGIONAL NEWS

BRIEFLY

LAGOS W. Africa Container Terminal set for $10 million upgrade West Africa Container Termi- nal (WACT), Onne Port, Rivers State, has said it is preparing to take delivery of two new mobile harbour cranes from Liebherr, as part of $10 million upgrade. The upgrade would bring WACT at par with its peers in Apapa and Tin Can Island Ports, Lagos, in terms of equipment and operational efficiency. WACT boss Aamir Mirza said the mobile harbour cranes are expected in Nigeria next month.

KAMPALA An impression of Egypt’s New Administrative Capital. The city is being built at a cost of $58 billion. COURTESY Government plans to restore old railway at $205 million Uganda will invest $205 mil- Egypt’s new desert capital now lion in restoring an old railway line linking Kampala to Malaba on the Kenyan border following delays in securing funding for faces delays as it battles for funds the standard gauge railway. The upgraded meter gauge heads the company building the gant 19th and early 20th centu- railway line is expected to INVESTMENT: The project aims to offer a clean new city, told Reuters. ry architectural heart has fallen boost monthly freight capacity and efficient base for State and finance industry But he said “the large scale into disrepair. to 120,000 metric tonnes from of the work leads to large scale The new mega city, known the current 20,000 tonnes by problems”, such as finding for now as the New Adminis- 2026, Stanley Sendegeya, Ugan- gypt’s government wants and efficient base for the gov- enough skilled labour to wire trative Capital, is eventually da Railways Corporation’s chief to start running the na- ernment and finance industry, up the “smart city” and raising expected to cover about 700 financial officer, said. Etion from a new capital in as well as homes for at least 6.5 about 1 trillion Egyptian pounds square kilometres. the desert from mid-2020, but million people. ($58 billion) in financing over The first phase, covering KIGALI the $58 billion project is strug- coming years from land sales about 168 square km, will have gling to raise funds and needs Political turmoil and other investment. ministries, residential neigh- 2,000 low cost homes set for to overcome other challenges But the project, which also “We need very extensive fi- bourhood, a diplomatic quarter construction in Nyarugenge after investors pulled out. seeks to lift an economy dented nancing and the state doesn’t and a financial district. Workers are rushing to build by political turmoil after 2011, have money to give me,” said A large mosque and cathe- Construction of at least 2,000 core areas of the new city to re- lost a lead investor from the Abdeen, adding that about 20pc dral, as well a hotel and confer- affordable housing units has place Cairo, the existing capital United Arab Emirates and is of investment so far had come ence centre, have been built. been launched in Nyarugenge on the Nile that has become a now being run by the Housing from abroad, including up to With parks and tree-lined av- District in Rwanda. The project traffic-clogged, urban sprawl of Ministry and the army’s Engi- $4.5 billion from China. enues, the city will consume an is under Rugarama Park Estate, more than 20 million people. neering Authority. A promotional video depicts estimated 650,000 cubic meters a joint venture between Shelter The project, launched in “There is very strong interest a green city, running on cash- a day of water from the North Afrique and the Development 2015 by Abdel Fattah al-Sisi a from the political leadership in less systems for transport and African nation’s resources. Bank of Rwanda. year after he was first elected the project,” said Ahmed Zaki other services, that contrasts Developers say building costs president, aims to offer a clean Abdeen, a retired general who with Cairo, much of whose ele- - REUTERS are minimised as much as pos- sible in order to keep selling prices down and ensure that the homes provide the first step in housing ladder to Rwandans who will reside in the modern New tax plan to hurt Uganda home builders and ecofriendly estate. JUBA The cost of construction in bars and mild steel. Uganda is likely to escalate in Besides the taxes, the gov- New bridge slashes travel the coming financial year, if ernment has also passed a pol- times in Kuajok , South Sudan parliament passes a proposal icy that will see previously ne- by the government to increase glected building materials that Residents and officials in taxes on imported materials in have low value in international north-west South Sudan say a a bid to promote the consump- commodity markets, yet pro- new European Union-funded tion of locally produced goods. vide crucial inputs for domestic bridge that opened this month Under the proposal, granite construction, listed as minerals. will make travel safer, cheaper and marble tiles will attract an These include murram, sand, and faster for people in the re- applicable duty of 35 per cent, rocks, gravel, slate and laterite. mote Bar El Ghazal area. up from 25 per cent during the Once treated as minerals, the The $6.5 million 120-me- fiscal year 2019/2020. commodities will attract roy- ter-long bridge is located in The government has also in- alties and taxes that will push Kuajok, the capital of Gogrial. Residents of Kuajok say, until troduced a new charge on flat Workers at a construction site. FILE up their prices. This comes at a rolled products of iron and time when builders are racing now, it has often been extreme- non-alloy steel, with traders set 25 per cent charged under the The materials affected are to meet rising demand for homes. ly difficult, even treacherous to to be charged up to $350 per East African Community (EAC) iron sheets, galvanised coil, cross the intimidating Jur River tonne -- which is equal to the common external tariff. hoop iron, twisted bars, flat - THE EAST AFRICAN to deliver goods or services. CONSTRUCTION KENYA JUNE 2019 15 WORLD NEWS Office projects in London highest since Brexit vote

GROWTH: Some 3.5 million sq feet of new offices months, bringing the total of- Facebook, which will occupy fice space under construction in two new buildings in King’s were started in the past six months, more than at central London up to 13.2m sq Cross amounting to more than any point since the six months to March 2016 ft, up 12 per cent from the pre- 600,000 sq ft. vious survey. Tech groups have boosted ap- Deloitte said the level of ac- petite for offices in London in tivity was “remarkable, given recent years; Facebook has also BY FINANCIAL TIMES Deloitte, said the rise was “tes- the magnitude of political and recently agreed to lease Deben- tament to developers’ contin- economic uncertainty” during hams’ former headquarters in uilders broke ground on ued confidence in London’s of- the survey period, which led up the West End and to occupy a more new central London fice leasing market”. to the UK’s originally scheduled whole Soho building run by the Boffice space in the past six Liam Fox, international trade departure date from the EU, shared-office provider WeWork months than at any point since secretary, said the figures are amid deepening concerns over for two years. the EU referendum, despite “a far cry from the doom and a chaotic “no deal” exit. The previous peak in new worries over the Brexit vote’s ef- gloom predicted when the UK New leasing deals overall construction starts occurred in fect on property demand. voted to leave the European Un- were “notably reduced” in the the six months to March 2016, Some 3.5 million square feet ion in 2016 and [reinforce] the period, they added, in one sign when developers started 4.8m of new offices were started, City’s global pre-eminence as an of Brexit weighing on senti- sq ft of new offices in central more than at any point since investment destination”. ment. London. That was the highest the six months to March 2016, Mr Fox told an audience of He added: “The London sky- But businesses have contin- figure in five years. and up almost 40 per cent from financial services professionals line is the most obvious indica- ued to show strong appetite Deloitte said that while of- the previous survey, according that the City would emerge “fit- tor of investor confidence in the for newly constructed build- fice construction numbers re- to statistics from Deloitte Real ter, stronger and more dynam- City.” ings. More than half the space mained strong, sentiment sur- Estate. ic” after Brexit, while noting the Some 37 new developments under construction has been veys of the sector were more Mike Cracknell, director at sector’s “difficulties”. were started during the six let to companies including downbeat. Japanese prefabs builder enters UK housing market

BY AGENCIES England, which was launched he UK government has last year with a remit to acceler- entered into a partnership ate housebuilding. Twith one of Japan’s largest Urban Splash will invest developers on a £90m house- £37.5m equity into the new ven- building scheme, as it seeks to ture. A further £21.9m will come increase new housing supply to from Sekisui, while Homes Eng- address a shortage of homes. land will supply £3.1m in equity Civil engineering work fell for a fourth straight month since February. FILE Homes England, a govern- and £26.9m in debt funding. ment body, and Sekisui House This month, the government have invested in a joint ven- announced it was extending ture with UK developer Urban permitted development rights, house-building remained softer Splash, which aims to deliver which allow developers to con- Brexit uncertainty hits than on average in 2018. “thousands of new homes”. vert commercial space into res- “Reduced workloads led to Homes delivered through the idential units. The measures more cautious recruitment joint venture will be built in fac- have been criticised for creating UK construction sector strategies and the non-replace- tories, rather than on-site, using poor quality housing, but have ment of departing staff in May,” a technique known as modular helped to increase government IHS Markit said. construction. delivery numbers. BY REUTERS Economists polled by Reu- Construction accounts for Sekisui House is an experi- Homes England aims to ters had expected the index to 6pc of Britain’s economy, which enced modular builder that de- pump £27bn into housebuilding Britain’s construction indus- remain at 50.5. has relied heavily on spending livered 43,735 homes last year, programmes over the next few try had its worst month in more “Commercial building re- by consumers to offset the drag close to 5 per cent of Japan’s to- years, according to a spokesper- than a year in May as custom- mained hardest-hit by Brexit on corporate activity caused by tal. In its 59 years of operation, son. Recent investments made ers postponed investment in uncertainty, with construction the lack of clarity over the coun- the company has built more by the body include a partner- the face of Brexit uncertainty firms reporting the steepest try’s departure from EU. than 2.4m homes. ship with Barclays to provide and the sector lost jobs at the fall in this category of activi- Figures published earlier this The British government has £1bn in loans to small and me- fastest rate since 2012, a survey ty since September 2017,” Tim month showed the biggest an- set a target to build 300,000 dium-sized developers. has showed. Moore, associate director at IHS nual fall in retail sales since at new homes a year by the mid- Kit Malthouse, the housing The IHS Markit/CIPS con- Markit, said. least 1995, however, excluding 2020s. “By helping bring one minister, said the investment struction Purchasing Managers’ Civil engineering work fell distortions caused by Easter. of the world’s largest and most would help “to deliver more, Index (PMI) fell to 48.6, the low- for a fourth straight month — Adding to signs of a loss of innovative housebuilders to UK better and faster home con- est reading since March 2018, the longest such run since the momentum in the economy, shores, we’re putting our mon- struction to ensure a new gen- when the country was in the first half of 2013, when Britain a PMI published for Britain’s ey where our mouth is,” said Sir eration can realise the dream of grip of an unusually cold winter was still in the shadow of the fi- manufacturing sector was the Edward Lister, chair of Homes home ownership.” that slowed down projects. nancial crisis — and growth in weakest in almost three years. 16 JUNE 2019 CONSTRUCTION KENYA WORLD NEWS

World’s first Hong Kong plans 3D-printed to build massive estate set for Latin America artificial islands The world’s first 3D-printed vil- lage could soon be made in Lat- in America. Yves Béhar and in- FEAT: Project involves reclaiming 17 sq km off dustrial design firm Fuseproject aims to build it in just 24 hours. the coast of Lantau, Hong Kong’s largest island The homes will be built for families living on less than BY THE ECONOMIST The new flats would be bigger $200 per month and provide than average and 70pc of them access to safe housing and shel- ong Kongers have less would be subsidised. On May ter from both environmental residential space than 25th Hong Kong’s quasi-parlia- and physical dangers. Hthe people of any other ment, the Legislative Council, “It is our belief designers, big city: 15 square metres each. approved the launch of a feasi- builders, and technology in- That is barely double the size of bility study. Reclamation work novators have the potential to a standard prison cell in Hong is unlikely to start before 2025. bring unprecedented speed and Kong. The Chinese territory is The estimated price tag, in- scale to housing design that can also the world’s most expensive cluding the cost of transport elevate the lives of some of the property market. links, is at least HK$624bn most impoverished populations The average price of a home ($80bn), officials say. That is Some legislators are highly opposed to the project . FILE around the globe,” Fuseproject is $1.2m, around 40pc higher equivalent to more than half of said on their website. than the nearest competitor, Hong Kong’s fiscal reserves. “3D printing, in particular, Singapore. To be fair, 45pc of The government, citing a re- people worry about the pro- government to abandon the offers a new and powerful tool Hong Kongers live in govern- port by a professional body of ject’s cost and environmental scheme. Chief among the risks for realizing this potential and ment-subsidised housing. But surveyors, says land sales will impact. Shortly after Mrs Lam they cited was the potential driving this mission forward.” the average waiting time for recoup the full cost of initial announced the idea, thousands threat to endangered marine Fuseproject partnered with such flats is five years. outlays on reclamation and in- of people took to the streets in animals, such as the city’s iconic New Story, a nonprofit work- Carrie Lam, Hong Kong’s frastructure-building. protest. Activists say they are pink dolphins. Debbie Chan, a ing on a mission to end global chief executive, has taken note. The idea is to turn part of the planning more demonstrations. volunteer for one of the groups, homelessness, and Icon, a con- Last year she unveiled a colos- new land into a “core business Chu Hoi-dick, a legislator Save Lantau Alliance, says the struction technology company, sal project, called Lantau To- district” which will be used by who opposed even conducting a government often makes the to design, plan, and build the morrow Vision. It involves re- multinationals as their “global feasibility study, agrees that the right noises about protecting estate. This method of home- claiming 17 square kilometres headquarters”. Officials hope government should do more to the environment but fails to building will be delivered to of land off the coast of Lantau, that will create hundreds of increase the supply of housing. monitor how its infrastruc- families who need cheap hous- Hong Kong’s largest island. thousands of new jobs and gen- But he says there are cheaper ture-building affects it. ing that adapts to their day-to- That is about five times the erate plenty of tax. ways to do it, such as develop- But these worries are unlike- day lives in Latin America. area of New York’s Central Park. Public opinion is divided. ing old industrial sites. Mr Chu ly to stop Mrs Lam. Wu Chi-wai, With 3D technology and the It is the biggest infrastructure Nearly 60pc of about 3,000 is “not at all” convinced by fi- another legislator who voted design possibilities, Fuseproject project ever proposed in the respondents to a govern- nancial projections, which, he against the feasibility study, aims to address questions relat- city. Housing on the artificial ment-commissioned survey says, take for granted that land says he has never come across ed to climate, family structure, islands would accommodate up supported, in principle, the prices will continue to rise. one commissioned by the gov- and the role homes play in cre- to 1.1m people, about one-sev- construction of artificial is- In March seven local con- ernment that concluded a pro- ating a larger community. enth of the current population. lands east of Lantau. But many servation groups called on the ject would not work. - BLOOMBERG Trade war threatens to pop Hong Kong’s property bubble

ecord high home pric- ting any major relief,” then es in Hong Kong have home prices will fall, he said. Rprompted some econo- The value of property trans- mists to forecast a bursting of actions in Hong Kong in the the bubble. first five months of the year Residential property values reached the highest level since in the city reached an all-time 1997, with buyers spending early this month after relent- $44.4 billion on everything less gains over the past three from homes to car parks, shops months. and office units, according to Prices have risen by 8.6 per Ricacorp Properties Ltd. cent since the beginning of the But the realtor believes an year, Centaline data show. escalation in the trade war and However with Hong Kong ex- a stock market correction could posed to the trade war between put the brakes on buying, re- China and the United States sulting in up to 40 per cent few- and the city’s stock market tak- er deals this month versus May. ing a hit, analysts say the likeli- That negative sentiment is hood of home prices declining Hong Kong is the most expensive property market in the world. COURTESY being expressed in other quar- is even greater now. ters, too. The recent equities sell-off -- a technical indicator that “Sentiment is likely to turn ics Ltd. in Hong Kong. Knight Frank said that trade has been so widespread that traders use to evaluate whether more cautious over the next “If the stock market contin- tensions and stock market vol- about a third of Hang Seng In- buying or selling of a security several months or probably for ues to come under pressure, atility will keep a lid on home dex constituents entered over- has become too extreme -- the an even longer period,” said especially if there’s no sign of prices and values could dip 5 sold territory early this month most in almost one year. Tommy Wu at Oxford Econom- U.S.-China trade tensions get- per cent in the second half. CONSTRUCTION KENYA JUNE 2019 17 18 JUNE 2019 CONSTRUCTION KENYA OBITUARY

QUICK FACTS I.M Pei, Louvre pyramid architect, World renowned architect in figures 102 moves into his heavenly mansion Architect I.M. Pei’s age at the time he died on Thursday, May 16, 2019. 1955 The year he founded I.M. Pei & Associates, which eventually became BOOKWORM: In 1940, at age 17, Pei Pei Cobb Freed & Partners in 1989. received a bachelor’s from the MIT and 1990 The year Pei retired from his firm in 1946 a master’s from Harvard Univ although he continued to work on a few commissions in his later years.

.M. Pei, a dominant figure in American architecture for more Ithan three decades who de- signed the Louvre’s crystal pyramid and the angular East Building of Washington’s National Gallery of Art, died on May 16. He was 102. Pei gave “this century some of its most beautiful interior spaces and exterior forms,” said the jury of the Pritzker Architecture Prize, which Pei won in 1983. Though reserved and supreme- ly diplomatic, Pei’s face, always crowned by round thick-rimmed glasses, could break unexpectedly into a wide, dazzling smile. He approached clients with charm and a quick wit, and they usually succumbed happily. “Mr. Pei is at once the most prag- Architect I.M. Pei in an undated photo. COURTESY matic and the most visionary of ar- chitects, his work poised skillfully Gold Medal in 1979; the Grande Me- architecture at age 17, receiving a building opened in 1976 four years between the demands of the real daille d’Or from the Academie d’Ar- bachelor’s degree from the Massa- late and almost double the original world and the dreams of art,” Paul chitecture de France three years chusetts Institute of Technology in cost estimate. Goldberger, architecture critic of later; and the Presidential Medal of 1940 and a master’s from Harvard Interestingly, the 71-foot-high the New York Times, wrote in 1989 Freedom, the highest civilian honor University’s Graduate School of De- glass pyramid he built as the Lou- after the opening of the Louvre pyr- in the U.S., from President George sign in 1946. vre’s new entrance relied for its amid in Paris. H.W. Bush in 1992. Pei honed his skills, in both de- extraordinary visual lightness on a Pei’s more than 50 projects in- Ieoh Ming Pei was born in Can- sign and coddling clients, under the fretwork of stainless-steel rods and cluded the Musee d’Art Moderne in ton, China (now Guangzhou), on tutelage of the prominent New York cables made by a manufacturer of Luxembourg (2006), Beverly Hills’ April 26, 1917, the son of a bank real estate developer William Zeck- yacht rigging. Creative Artists Agency building manager. endorf Sr. As in-house architect for Before its completion, the pyra- (1989) and the 72-story Bank of Zeckendorf’s Webb & Knapp Inc., mid was widely derided as an insult China Tower in Hong Kong (1989). High-rise buildings Pei designed shopping centers, of- to French history. He also designed the John. F. His family later moved to Suzhou, a fices and residential towers, such as Kennedy Library in Boston (1979) city near Shanghai. As a young boy, Manhattan’s Kips Bay Plaza. Influence and the Rock and Roll Hall of Fame Pei was enthralled by construction “I believe that architecture is a Once it opened, however, it proved and Museum in Cleveland (1995). of high-rise buildings in Shanghai pragmatic art,” Pei said. “To become a triumph -- the most admired of Among his many honors were the and Hong Kong. art it must be built on a foundation the “Grand Projets” with which American Institute of Architects’ He came to the U.S. to study of necessity.” France’s then-President Francois In 1955, he left Zeckendorf to Mitterrand hoped to transform form I.M. Pei & Associates, which Paris. would become I.M. Pei & Partners Even with all of his acclaim, Pei’s in 1966 and then Pei Cobb Freed & influence on the course of architec- Partners in 1989. ture has been limited, according to some critics. Heavy price His forms were recognizably Pei and his partners were perfec- derived from such great architects tionists in the use of modern build- as Le Corbusier and Louis I. Kahn, ing materials, cutting razor-sharp though he filtered them through a corners out of marble, stretching unique artistic sensibility. glass into vast, curved arcs, honing Although he retired from his concrete to a velvety sheen. firm in 1990, Pei continued to work Sometimes they stretched those on a few select commissions in his materials to the limit, paying a later years. heavy price. The slim, elegant John Pei was married to the former Hancock Tower in downtown Bos- Eileen Loo, the granddaughter of a ton, for example, shed dozens of former Chinese ambassador to the its 11-foot-tall plates of reflective U.S. The couple had three sons -- glass during construction, spurring T’ing Chung, Chien Chung and Li litigation that might well have de- Chung -- and a daughter, Liane. stroyed the firm. The Louvre pyramid in Paris, France . COURTESY The claims were settled, but the - BLOOMBERG CONSTRUCTION KENYA JUNE 2019 19 MONEY & INVESTMENTS State firm to offer mortgages at less than 10pc HOUSING: KMRC has attracted over 20 investors including eight commercial banks and 11 saccos

BY JOY MAKENA er, those earning upwards of Sh150,000 will continue to ac- he Kenya Mortgage Refi- cess home loans at market rates. nancing Company, which KMRC has so far mobilised Twas launched last month, Sh37.2 billion – a mere drop in will begin its operations this the ocean considering that the month – issuing bonds and 26,187 mortgage accounts that mobilising funds from global commercial banks currently financiers. hold are worth Sh223 billion KMRC, the country’s first according to statistics from the secondary mortgage financi- Central Bank of Kenya. er, is expected to slash interest Among KMRC’s notable rates on home loans to single investors include the World digit from the current rate of Bank’s private sector lending 13.5 per cent. subsidiary – the Internation- KMRC, which is being fash- al Finance Corporation (IFC) ioned as an implementing arm – Cooperative Bank of Kenya, of President Uhuru Kenyatta’s and Nairobi-based Pan-African affordable housing plan, will financier Shelter Afrique. advance cash to commercial The IFC has pledged to in- KMRC will be regulated by the Central Bank of Kenya. FILE banks, saccos and mortgage ject Sh200 million into KMRC companies for onward lending for an undisclosed stake in the will cushion commercial and bined equity investment of up to individual home buyers at business. Co-op Bank and Shel- BACKGROUND microfinance banks as well as to Sh1.2 billion. rates below 10 per cent. ter Afrique have injected a total savings and credit societies The World Bank recently ap- “Once operational, KMRC of Sh400 million into the State How KMRC will (saccos) engaged in long-term proved a loan of Sh25 billion will support a large number of mortgage firm. disburse mortgages mortgage financing and at a for KMRC whose total funding creditworthy potential borrow- Shelter Afrique’s chief exec- lower cost,”Mr Chimphondah requirement is estimated at ers who are not able to obtain utive Andrew Chimphondah •Kenyans earning monthly said in a statement last month. Sh26.4 billion. KMRC will be loans at the moment,” President recently said the funds would salaries of Sh150,000 and below KMRC has attracted more regulated by the Central Bank Uhuru Kenyatta said. enable Kenyans buy houses in will be able to obtain loans at than 20 investors so far includ- of Kenya as a non-deposit tak- single digit rates. Individuals Kenyans earning monthly urban areas through an afforda- earning upwards of Sh150,000 ing eight commercial banks, ing financial institution, with salaries of Sh150,000 and be- ble long-term mortgage facility. will access loans at market rates. one micro finance bank, and the Capital Markets Authori- low will be able to obtain loans “We are encouraged by the 11 saccos. It is envisaged that ty providing oversight over its at single digit rates. Howev- formation of the KMRC that private firms will make a com- bond issuance operations.

be part of it,” Mr Macharia said. The ambitious project which Investors seek to is part of President Uhuru Ken- yatta’s Big Four agenda is ex- pected to deliver one million housing units in next five years inject Sh3 trillion to plunge the gap estimated at 1.8 million units. Some 800,000 houses are ex- pected to be constructed under into homes project the public private partnership model and 200,000 will be built under a social scheme that tar- BY JANET MUTEGI Nairobi mid last month. gets the poorest of the poor cit- His sentiments mirror those izens. lobal financiers haveof Transport, Housing and In- pledged to invest nearly frastructure Cabinet Secretary Legal challenges GSh3 trillion into Kenya’s James Macharia who in Janu- The project is, however, facing affordable housing scheme in ary said the planned low cost legal challenges after the High a development that signals the housing blueprint had attracted Court in December postponed lucrativeness of the venture. high profile financiers who -ex enactment of a 1.5 percent levy Housing Principal Secretary pressed interest to build up to that was to be charged on work- Charles Hinga recently dis- one million units countrywide. ers’ monthly pay to create a closed that the project has re- “Actually one investor has ex- The project is estimated to cost Sh1.5 trillion. FILE housing fund. ceived offers of Sh2.7 trillion – pressed interest to fund 100,000 There are also disagreements which is way above the target of units. The project is no longer a Although the terms of fund- lucrative for investors – mostly on how the government intends Sh2 trillion. vision, but a reality,” Mr Macha- ing are yet to be made public, it Chinese firms – to resist. to allocate houses. ‘’Investors are upbeat about ria said in an interview. is believed that the Kenyan gov- “We have had talks with the In February, the government this project. We received invest- The government had initial- ernment has handed out gener- Chinese government and they disclosed that a lottery system ment offer of $22 billion (Sh2.2 ly planned the construction of ous incentives to lure some of are looking into investing in would be used to assign the trillion) in the first round and a 500,000 houses, but this figure the world’s top financiers into this fund. houses, sparking verbal dis- third of the amount (Sh700 bil- is likely to double if investors’ the scheme. “They are into big infrastruc- sents from a section of workers. lion) in the second round from proposals happen to see the ture projects but given the re- Last month, PS Hinga said across the world,’’ Mr Hinga light of day. Lucrative venture turns that are expected when the government is working on told a Commercial Bank of Af- The highly ambitious project Indeed, Mr Macharia had earli- this housing project comes into a modality that will ensure fair rica (CBA) Economic Forum in is expected to cost Sh1.5 trillion. er said the project would be too fruition, they definitely want to allocation of the houses. 20 JUNE 2019 CONSTRUCTION KENYA MONEY & INVESTMENTS Payment of pending bills to boost construction

to secure full compliance of this ECONOMY: Late payment culture has made it directive,” President Kenyatta hard for builders to meet their financial obligations said, urging counties to follow suit. layed payment by the govern- “Going forward, and in line BY JUDY MWENDE ment, both the national and with our policy to promote the county, and we expect the num- local industry and enterprise, ocal construction compa- bers to look better as they get “Buy Kenya Build Kenya”, I di- nies have been featured paid,” Dr Njoroge said in a 2017 rect that all payments for sup- Lamong the biggest default- press conference in Nairobi. plies made to national and ers of commercial bank loans as In a bid to cushion them- county governments be pro- a delay by the government to selves from cash flow crises, cessed and made promptly and pay contractors’ bills continues some local contractors are mov- on a priority basis,” he said. to take its toll on the building ing away from state-backed pro- The directive comes at a time and construction sector. jects – in favour of undertakings when local steel manufacturers According to the central that are funded by development Late payment has crippled many businesses. FILE are pushing for prompt pay- bank, big contractors contrib- agencies. ments regulations and a cred- uted the most to last year’s in- For instance, H Young & construction firms are increas- Madaraka Day celebrations it-risk default cover to cushion crease in the stock of non-per- Company Ltd., one of Kenya’s ingly finding it hard to obtain in Narok, President Kenyatta them against delayed payments forming loans, a situation that largest engineering contrac- credit from commercial banks lamented that late payment that have seen retailers with- is likely to get worse due to the tors, disclosed in a 2015 report – a situation that is likely to fur- had negatively affected many hold Sh40 billion. current slowdown in the con- by Global Credit Ratings that ther slowdown the industry. businesses, mostly those whose “We are working at 40 per- struction industry. it was mitigating late payment But in a drastic attempt to bulk of capital remains locked cent capacity since most of The situation has been so risks by “targeting projects change this narrative, President in non-payment, hence the need our cash is held out there and dire that in 2017 two local ce- that are largely development Uhuru Kenyatta has directed all to clear them immediately. introduction of this insurance ment manufacturers and a plas- agency funded or contracts for ministries to settle all pending “I hereby direct that all Ac- cover means assurance that all tic dealer cumulatively owed high credit quality internation- bills that do not have audit que- counting Officers pay and settle steel products we release to the commercial banks about Sh5 al engineering companies, and ries, before the end of the cur- all pending payments that do market is paid for promptly,” Mr billion, according to CBK gover- private sector industrial com- rent Financial Year which will not have audit queries, on or Bobby Johnson, Kenya Associa- nor Patrick Njoroge. panies.” close on June 30. before 30th June 2019. Further, tion of Manufacturers Steel Sec- “A lot of these relate to de- Industry sources say that Speaking during this year’s I direct the National Treasury tor chairman, said last month. CONSTRUCTION KENYA JUNE 2019 21 STRATEGY & MANAGEMENT LEADERSHIP I TRENDS I SUCCESS

How to make social media work for your business

them as opportunities to engage, Businesses must STRATEGY: Social media offers you the chance to build trust, grow your brand, and Don’t oversell find new ways to use build a highly effective sales force for your business You know that guy at a party who collect market research. always wants to sell you insur- technology to improve If you pay attention, you can ance? Don’t be that guy. Get to customer service and get ahead of potential problems. n social media, you must not up. Whether it’s Twitter, Face- know people, engage honestly, experience. FILE only engage but also engage book, or Pinterest, what matters and join in the conversation ... Invest in sound Iconsistently. The key to build- are your thoughts. Post things don’t dominate it. If you’re posting video or audio ing meaningful relationships is to that genuinely interest you. Giving advice and offering sug- content, keep a couple of things join the conversation. By reaching gestions will make you seem help- in mind. Even though your color, out to people in your community Engage, engage! ful, knowledgeable, and trustwor- background, and production val- and responding to their com- The primary goal on social media thy. Get people to ask you about ues may not be perfect, good ments, you can set the agenda. is to build relationships and add yourself, rather than telling them sound is very important. Pick one platform to start with, value. This is where most people about yourself, and they’ll be Buy a high quality microphone whether it’s Facebook, Twitter, fall down. They work so hard to more receptive. for quality sound and, whatever LinkedIn, Instagram or another create content and push it out, the source of your video, be sure from the growing list of choices. but then they fail to step in and Daily “hour of power” there’s enough light for people to Learn a little about the chan- engage with their audience. Getting started with these tech- see you clearly. You don’t need to nels before you decide. That means don’t talk at people nologies is quick and easy. Open- spend a lot of money, but this is They do have different charac- but post what you think is cool. ing an account costs nothing, and one detail you should invest in. teristics and are therefore some- Respond to comments. Jump into posting is free. In a few minutes, what different in how you can communities. Share your perspec- you can be up and running. With- Tell them how to reach you best present yourself. For exam- tive and point of view. in an hour, you can reach out and Let your fans know how to reach ple, LinkedIn is more popular in connect with friends, co-workers, you. If possible, give them your the business world and has a very Document -- don’t produce and customers. web address, email, phone num- large international following. Overproduced content tends to Spend one hour per day during ber, and social media handle. Use Meanwhile, Instagram is more turn people off on social media. your launch engaging with the the same handle on all social me- visually oriented. Twitter is very Plus, you need so much content community. That’s it. In one hour dia platforms. newsworthy, with quick com- (videos, audio, blogs, etc.) that a day, at zero cost, you can build Social media offers you the ments and responses, and Face- most people don’t have the time an army. The cost in time and chance to build a massive sales book has many businesses, but and resources to put it into pro- money is negligible, but the po- force that will be more effective the approach is more social. duction and make it look fancy. tential payback in exposure and than anyone you can put on staff. These tips will help: People don’t care. They don’t attention is incalculable. Your crowdsourced sales force care about what you created last will be out there telling other Be authentic week. They want to get to know Monitor your brand people who are interested in your Be yourself. Share and tweet and you, experience your day with you Make sure to regularly fre- product or service all about you. post the things that interest you. and relate to you. quent the sites, feeds, and pages People are much more likely to Don’t try to be what you think As a result, it’s much more that discuss your industry, prod- trust your brand and make a pur- others want you to be. powerful to document your life in uct, or service. chase based on a friend’s referral And don’t work too hard to real time than it is to take a bunch Look for posts that mention than by listening to you. make everything perfect; if you of time honing and polishing one your company. Respond to all do, you will never put anything piece of content to a high sheen. comments and complaints, using - ENTREPRENEUR 22 JUNE 2019 CONSTRUCTION KENYA STRATEGY & MANAGEMENT

TOPPING OUT

Establish a budget and stick to it. FILE

7 top financial tips for entrepreneurs launching a startup

1. Manage your cash flow. Most startups fail for a variety of rea- sons, but one is far more common than others -- running out of money. You need to know where every dollar is coming Don’t worry about what your future holds or whether you’ll be able to sustain your early success. FILE from and where it is going. If you don’t stay on top of your cash flow, you are going to put your business in a dangerous position. It doesn’t mat- ter how good your idea might be when How to acquire the first 20 you run out of money you hit a brick wall. Establish a budget and stick to it.

2. Track and monitor all spending. With a new startup, there are going customers for your start-up to be expenses coming at you from every direction. Hiring a full-time staffer to handle the books in the beginning isn’t very budget-friendly, so use accounting SUCCESS: Get first clients on software to remain organized. IN SUMMARY 4. Piggyback platforms Not only will this help with cash flow Use Airbnb’s trick and get your first cus- board, treat them well and use management, but it also makes it much What it takes to acquire tomers from another platform where us- easier when tax time rolls around every them to fund your next steps your first paying customers ers already live. year. As you grow and the accounting be- They used Craigslist’s user base to get comes more complex, you will need to tartups have to acquire customers i) Go where they are started. Zapier did the same thing with consider hiring a professional. and get revenue in the door soon- A smart strategy is to attend trade shows and online forums, where it posted links to er and sooner. Gone are the days conferences in your industry to understand get email addresses. S the market and to make vital connections. of raising big venture dollars before you Follow these examples and think 3. Limit your fixed expenses. In the beginning stages of a startup, really focus on revenue and customers. about where your customers already keeping your expenses low is the key Founders can no longer woo inves- ii.) Let them know you exist hang out online. Platforms that already to longevity. Operate thin so you can tors with just great ideas and “users.” While many business people take this for have users can be a great place to find granted, it is not obvious that your potential allocate the majority of your capital to The people behind the funding want to customers of your own. customers know of your existence. You growth, which will enable you to one day see real results right off the bat, which Selling your product is not a mul- therefore need to advertise yourself, your implement any perk you want. means the days of raising money with services - and above all your brand. tiple-choice question. You can do two no proof of success are over. things at once. Pick your favourite po- Here are tips to acquire your first pay- tential tactics, and then target sample 4. Spend your time wisely. Every second you spend doing some- ing customers on a shoestring budget: sizes that are just large enough to gen- thing unrelated to your business is time erate statistically significant results and (and money) wasted. 1. Attend trade shows close a prospect on the first call. Make get moving. Run your tests and measure Early-stage customer acquisition strat- the first call and invite to a special event the ROI of each channel. egies rarely scale well, so don’t wor- you host. This lowers the barrier and Keep it quick to limit your costs while 5. Focus on customer acquisition. The sooner you figure out how to ac- ry about that. Attend conferences and helps you get your foot in the door. validating your theories. quire customers and scale, the greater trade shows in your industry to make When one of your tactics leads to pos- the chances are of your company mak- vital connections. 3. Take advantage of paid ads itive results, double down on it. Then, ing it. Once you identify different acqui- Etsy is a great example of a company Paid ads are great in the early stages repeat the process for any other success- sition channels, work on optimization to that used this strategy. Its founders got because you can test things almost im- ful tactics you try. lower your costs. the company off the ground by travelling mediately. Even if the unit economics This provides you with feedback from to craft fairs and convincing vendors to aren’t there, it’s OK at the start, as you’re your real customers that you can use to open stores on the site. trying to drive revenue and validate as- improve your business model and prod- 6. Make sure you pay yourself. While you don’t need to compensate Alternatively, you could do what sumptions in the business model -- not uct. For now, though, just focus on con- yourself with a big fat salary in the be- Salesforce did and hire protesters to at- show profitability. verting new customers. ginning, make sure you pay yourself tend your competitor’s big conference. Try Facebook, Instagram and Linke- If you follow these four steps, you’ll enough to live. dIn ads to get started. end up with at least 20 new customers. 2. Don’t be afraid of cold-calling For example, Ilya Pozin, recently sold Don’t worry about what your future Even our favourite unicorns started his video streaming service Pluto TV to holds or whether you’ll be able to sus- 7. Establish financial goals. Rather than just say, “I want to build simple. Uber began by cold-calling lim- Viacom for $340 million. tain your early success. a multi-million dollar company,” you ousine companies. You could try Linke- He used small-budget ads on Goog- Get your first customers on board, need to break financial goals down into dIn outreach or work your network for le and Facebook to get his first users, treat them well and use that success to reachable and measurable ones. warmer introductions. which provided immediate data and re- fund your next steps. A tip for cold-calling: Don’t try to quired little money to validate. - ENTREPRENEUR CONSTRUCTION KENYA JUNE 2019 23 SITE REPORT Investors move forward with plan for Kenya’s tallest hotel in Watamu

GRAND PROJECT: 61-floor Palm Exotica on Turtle Bay Road will on completion earn the title of Kenya’s tallest free-standing structure

group of foreign inves- “This mixed-use develop- tors led by Italian bil- ment is for the discerning trav- Alionaire Franco Rosco eller who appreciates life’s finer are pushing forward plans to things. Sky rooftop restaurant set up a 61-floor luxury ho- and swimming pool as well as tel-cum-residential project in a spa and fitness room,” the in- Watamu, Kilifi County, in a de- vestors said in regulatory filings velopment that will gift Kenya submitted to Nema. its tallest building. Palm Exotica, which will Trading as Palm Exotica, the cost an estimated Sh28 billion, investors are now seeking the reserves its topmost floors for nod of the National Environ- exclusive private apartments mental Management Authority and penthouses. The meeting (Nema) to commence construc- area has 1,500-metre square tion of the facility on a 2.4-acre set aside adjacent to a 550-me- parcel of land at Dabaso, Turtle tre square ballroom and a 500 Bay Road in Kilifi. metre square exhibition cen- According to regulatory fil- tre while the lower floors will ings seen by CK, the investors house retail shops, food and say the property – to be known beverage outlets. as Palm Exotica – will be a mix- use development comprising a Unique design 270-bedroom five-star hotel, a “It is 20 minutes’ drive from high-end shopping mall, exec- Malindi Airport and 90 minutes utive offices and apartments, a from Mombasa airport as well casino, restaurants, and retail as 45 minutes from Vipingo outlets. Ridge Old Club,” Palm Exotica The luxury hotel will be op- says on its website. erated by a yet-to-be disclosed At 370 metres, the building An impression of the proposed Palm Exotica in Watamu. COURTESY global hospitality chain with that is designed by Italian ar- several hotel floors reserved for chitect Lorenzo Pagnini will presidential suites. be 50 metres taller than The Pinnacle, the soon-to-be tall- In addition, the investors est building in Kenya – which said they said they will pur- SUMMARY is under construction in Upper chase sand from suppliers with- Hill, Nairobi. in Mjana Heri near Malindi and Palm Exotica The owners of the project, that all of their ballast needs project in figures whose architectural design bor- will be met by dealers within rows from simple traditionally Jaribuni Township in Kilifi. 61 crafted art pieces of Kenya’s Palm Exotica plans to import The total number of floors of rich culture from the coast, are aluminum products from Nor- the proposed luxury-hotel-cum drawn from New York, South way, with glass and their acces- residential project. sories coming in from France. Africa and Italy. Sh28bn Custom built furniture and The estimated amount in Kenya Structural steel interior fittings will also be im- shillings that will be spent on The developers have pledged to ported although they will be as- construction of Palm Exotica acquire cement from Bamburi sembled locally. 370 and Mombasa Cement, while The height in metres of the sourcing machine cut stones Ecosystem proposed high-rise building. from Tezo in Kilifi. Environmental consultant who “Reinforced steel will be studied the project have dis- sourced from Apex, Prime, Athi pelled fears that the facily will nearby marine ecosystems like and Tononoka factories – all have undesired effects on the mangroves and coral reefs,” the operating in the coastal region, coastal ecosystem. experts said in the project’s en- but structural steel will have to “The project will be carried vironmental study. be imported since no factory out on the second row from Palm Exotica is expected to locally produces the required the beach and will therefore boost Watamu’s profile as a key Palm Exotica will be tallest structure in Kenya. COURTESY sizes,” they said in a statement. not interfere much with the tourism destination in Kenya. 24 JUNE 2019 CONSTRUCTION KENYA