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October, 2018


Take fish row seriously

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A dispute over fish threatens to sour the cordial relations Kenya and China have enjoyed in recent years with increased development co-operation. Now the biggest infrastructure project in Kenya in centuries, the standard gauge railway, built with huge Chinese loans, could be in jeopardy. China is incensed that Kenya has decided to stop importing its fish.

The mounting acrimony started the other day, when President Uhuru Kenyatta questioned why Chinese fish had flooded the Kenyan market at the expense of local fishermen and traders. But the President was only echoing public complaints about the imports, some of them illegal. This dispute is sobering confirmation that relations between nations are all about interests.


Opening the floodgates of Chinese fish is likely to ruin the market for many Kenyans, denying them a livelihood. Kenyans catch 130,000 tonnes of fish annually. A shortfall of 37,000 tonnes is what importers should plug. The fishing industry supports no less than 100,000 Kenyans directly and nearly 800,000 indirectly.

However, the fish issue could just be a manifestation of a deeper problem in the growing unequal ties between the two countries. Indeed, quite alarming is the threat by China to withhold funding for the second phase of the SGR. It is a subtle warning that the more indebted Kenya becomes, the more it risks getting arm-twisted over other interests.

This is bound to put the Kenyan leadership in an awkward position as the people have sampled the benefits from the Mombasa-Nairobi SGR and the stalling of the second phase would be a huge setback. It is for this reason that we agree with the politicians calling on the government to reduce its appetite for huge infrastructure development loans and cut its coat according to its cloth.

KRA must find a way to catch tax evaders

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Tax collection has continued to decline in the past years, leading to a serious cash flow challenge. Fresh data by the Kenya Revenue Authority shows that the tax collection fell below target last year, Sh1.48 trillion against a figure of Sh1.65 trillion. This deviates significantly from the budget plan of Sh3 trillion for the current financial year.

Although part of the budget will be met through loans and donor aid, there still is a big shortfall and that has implications on the economy. It all leads to debt pile-up and consequently creates further squeeze on national resources as repayments have to be prioritised at the expense of other national needs.

Already, the government has been forced to introduce new punitive taxes to raise additional cash to plug the shortages, but at a cost to the citizens. Inevitably, prices of essential commodities and goods are bound to rise. Already, maize flour dealers have signalled intention to raise prices given the rising costs of production and doing business.

But the critical point is that tax collection is proving difficult, which is where KRA has to expend its energies. At the heart of the matter is tax evasion. Very many potential taxpayers are out of the net. Just a few, especially those on salaried employment or recognised businesses, pay taxes and, given that they are within the net, bear heavy burden with frequent increases.

Paradoxically, there is a category of wealthy Kenyans who are completely out of the tax bracket because they have perfected tactics of evasion. Either they keep their cash out there in secretive accounts or manipulate the systems locally to avoid remittances. According to independent estimates of wealth portfolio among Kenyans, the number of the super-rich, those valued to be having assets worth above Sh3 billion, has risen in recent years by 11.7 per cent. Yet most of them do not pay taxes. They own wealth but skip taxation, whereas the low-income earners pay without fail. It is an obnoxious situation that must be demolished.

KRA has on several occasions made strident attempts to close in on all eligible taxpayers but the systems seem to be faulty. Worse, some of the super-rich have devised ways to take shortcuts or manipulate accounts through conniving with tax collectors. Not that they are unknown when demographic information is easily available through technology. It is sheer fraud.

KRA must just expand the tax base to bring in all eligible individuals. It needs to deploy innovative strategies to increase collections. Elsewhere, incentives such as waivers on late tax payments, rather than sanctions, have motivated people to come out and pay — such initiatives can help.

Off-grid solutions cure for power deficit in Kenya

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Kenya was recently ranked highly in the Global Energy Transition Index (Geti), which measures the ability of countries to balance energy security, affordability, accessibility and environmental sustainability.

Even though Kenya ranks above economies such as China, India and South Africa in the World Bank assessment, to attain universal electricity access for all, the 27 percent off-the-grid population should be connected to the mini grid. Mini-grid — or rather, off-grid — solutions is electricity provided from solar, biogas and, to some extent, pico hydro (hydroelectric power generation of under 5 kW), especially to communities that have no access to natural on-grid energy.


An off-grid solution to electricity access in Kenya is critical. The least-cost power development plan (LCPDP) 2017-2037 envisages 100 percent connectivity for Kenyans by 2020. However, rural areas reportedly registered a very low access rate despite the government having registered an encouraging average rate of 73 percent by mid this year.

This is where Kenya’s energy landscape offers latent opportunity for the entrepreneurial class to invest heavily in these off-the-grid technologies. There is optimism, especially with a new dispensation in the electricity sector set to be ushered in by the Energy Bill 2017 now before the Senate.


The Bill envisages, among many others, a scenario where net metering would be a low-cost, low-risk way to introduce and connect small-scale renewable energy investors to the grid. But, most importantly, off-grid solutions will allow Kenya to continue its leadership in commercial renewable energy development in East and Central Africa.

According to the International Energy Agency, around 600 million people, or two-thirds of Africans, are still without access to power; hence, off-grid solutions can be critical in closing the energy access gap in the continent and create a successful forward path out of energy poverty.


These technologies convincingly have a potential for the private sector to participate and complement the government’s efforts to attain access to electricity, which forms an integral part of the solution to energy shortfall as well as enhance and advance the energy dilemma conversation.

Adoption of technologies such as mini-grid solutions are necessary since they have the potential to revolutionise the energy sector. The viability of the micro-grid as well as off-grid solutions have been a challenge. However, with the advancement of technology, this is no longer the case and more housing units are embracing these systems.


In Tanzania, for instance, where pockets of change are already realised, Power Africa collaborated with the US Department of Energy’s National Renewable Energy Laboratory (NREL) to create a quality assurance framework for the mini-grid solutions.

According to the director of investment advisory, Energy 4 Impact, Peter Weston, by providing this framework, performance and monitoring for mini–grid greatly enhanced better regulatory compliance by customers who adopted these technologies into their housing units, eventually transforming homes into eco-friendly units.

As Kenya looks forward to phase out kerosene in favour of clean energy (in the energy markets) due to its hazardous nature and the notorious part it plays in fuel adulterations, off-grid solution would be a welcome alternative.

Supporting off-grid solutions and investing in generation, transmission and distribution of electricity collectively forms part of the road map to realisation of access to electricity for all.

Mr Thuo is an energy economist and adviser at The Africa Utility Forum. [email protected]

Lessons in timely decision from historic KQ flight to New York

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When Kenya Airways’ inaugural direct flight to the United States finally took off on Sunday night, the fanfare around the historic moment masked the turbulence of how long it has taken to get the rights to fly non-stop to American airports.

It’d taken the government more than a decade to comply with the strict US aviation requirements for direct flights between Jomo Kenyatta International Airport and John F. Kennedy in New York.


The envisaged benefits from the daily flight connections — from increased revenue for KQ to expanded trade, investment and tourism opportunities — would have contributed to Kenya’s economic and social transformation much earlier. Bureaucracy and regional security threats from Al-Shabaab delayed these benefits.

Plans for the direct aviation connectivity were part of the Northern Corridor Transport Improvement Project that former President Mwai Kibaki’s government implemented from September 2004 with the support of the World Bank.


One of the components of the project was to enhance Kenya’s aviation safety and security to meet international standards. That involved improving the operations of the Kenya Civil Aviation Authority to achieve Category One status clearance under the International Aviation Safety Assessment of the US Federal Aviation Administration. The project also financed the upgrading of JKIA to have it cleared by the US Transport and Security Administration.


Actions required to improve security included separating domestic and international flight facilities and arrivals and departures. The option was to move the domestic flights terminal to the old Embakasi airport but the idea was abandoned even after implementation of a contract to improve the facility. Some of the duty-free shops, which had turned JKIA into a bazaar, were also supposed to be removed.

Although TSA cleared JKIA for direct flights in April 2009, safety and security clearances were not obtained, mainly due to terrorism threats. Kenya also suffered a major setback when a fire destroyed part of the airport’s main terminal building in August 2013. The clearance was finally obtained this year, in what has turned out to be an important pointer to warmer relations between President Uhuru Kenyatta’s government and US President Donald Trump’s administration.


The flights open a world of opportunities that need to be managed for Kenya to maximise the benefits. KQ anticipates a revenue increase of 10 percent, according to Sebastian Mikosz, its CEO. An additional income of over Sh10 billion (10 percent of its 2017 revenue of Sh106 billion) would hasten KQ’s recovery from three years of losses that forced it into a government bailout last year. The national carrier has to remain competitive.


The direct flight cuts travel time between Kenya and the US by over 10 hours, improving prospects for increased earnings from tourists and business travellers from the American market. The US, with a population of over 325 million with average incomes of over $60,000 (Sh6 million) a year, is one of the largest source markets for Kenya’s tourism.

The greatest benefit for Kenya would be in trade and investment, driven by improved competitiveness and the readiness of exporters to venture into the US market with quality products. Reducing the cost of doing business and improving the quality of textiles and garments, for instance, would be critical to expand trade under the Africa Growth and Opportunity Act (Agoa).


The government also needs to manage the improving interest of large US firms keen to establish regional hubs in Kenya. They need a conducive environment for doing business, hence, the need for prudent business regulations and fighting illegal trade practices.

The latest “Doing Business” indicators show the shortfalls, whose fixing would save the economy from losses caused by bureaucracy and apathy in making and enforcing good business practices.

Crop insurance can improve food security in Africa

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Our food security depends on reliable harvests from smallholder farmers but erratic weather is making their job increasingly risky, with droughts cutting into harvests across Malawi, Rwanda, Tanzania and Zambia this year.

Governments must secure the livelihoods of farmers. One proven tool to increase farmers’ resilience is crop insurance, which helps them to weather poor harvests and adapt to a changing climate. But few insurers want to enter the market, making government support — like the Kenya Agriculture Insurance Programme (KAIP) — critical.

Agriculture has always depended on the weather but climate change is making growing cycles more unpredictable. Africa’s 50 million smallholder farmers, who rely on rain-fed crops to feed their families, are feeling these changes first. For families who live season to season, a bad weather year can mean months of hunger until the next harvest.

In the short term, crop insurance can help to reduce hunger. When weather harms their crops, farmers get reimbursed for a portion of their upfront investment in seeds and fertiliser, easing the immediate financial pressure of a poor harvest.


In the long term, insurance can increase resilience. Farmers who purchase hybrid seeds suited to their local climate reliably harvest more food. But many farmers are, understandably, nervous to spend money on high-quality seed if they fear a bad year.

When farmers are confident of crop insurance coverage, they are more willing to try modern farming methods — a key to bigger harvests.

The idea is simple but the challenge is scale. Insuring 50 farmers in a single village is risky, because they’re all likely to have similar harvests. But insuring 50,000 farmers in a bigger area means the risk is more evenly spread, making it a better bet for insurance companies and more affordable for farmers.

Progressive policies can create an important incentive for agricultural insurance. In Kenya, the 2018/19 agricultural budget prioritises farmers’ resilience to “climate shocks” with a key focus on crop insurance for smallholders.


That encourages insurers, who have traditionally focused on commercial farms, to add coverage options for the small-scale farms that produce 70 percent of Kenya’s maize. Rwanda is also developing a policy on crop insurance.

Subsidies can also help to build demand. Since 2016, KAIP has offered a 50 percent insurance subsidy for smallholders growing maize and wheat, one of the first large-scale schemes in Africa. In Uganda, the government offers a 70 percent subsidy for smallholder and commercial farmers, growing the insurance sector by 17 percent in 2017.


Finally, education is critical. Given low levels of awareness around crop insurance in the region, farmers may be hesitant to buy insurance. Sensitisation can help to build farmers’ confidence in the coverage.

Once governments have set the stage with smart policies and subsidies, the challenge is adoption. Governments can encourage adoption by tapping into existing networks for farmers rather than pursuing each farmer individually. For example, co-operatives, microfinance institutions and agro dealers can be encouraged to purchase insurance on behalf of a group of farmers.

We’ve seen Africa’s future, and it’s exciting — or maybe scary

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Earlier in the year, Bloomberg reported the cost of solar panels will fall by 35 percent in 2018. Since 2010, the cost of solar photovoltaic (PV) electricity has fallen by 73 per cent.

Globally, China is the main driver of stumbling solar energy prices with Bloomberg noting that it installed a “staggering 52GW in 2017”. By contrast, Africa installs, on average, 1,000MW of new power generation yearly and, as far as renewables go, some projections have it doing just 3,000M by 2022 — 17 times less than China did last year.


That’s no reason to give in to despair, however. Recently, I listened to a smart African who knows about renewables talk about how, with stumbling solar prices, low generation and crappy distribution, which have left 600 million Africans still living without electricity, there is a big rush to invest in renewables on the continent — the market is massive.

I didn’t think beyond the availability of cheap electricity for Africans when I was listening to him, until two other events in recent days.

A week ago, it was reported that researchers at RMIT University in Australia had achieved a new development in fibre optics that could make internet speeds up to 100 times faster. Mind-boggling! And, on Tuesday, Apple, at its iPad and Mac event (AAPL), in New York, announced a software update to enable Group FaceTime for up to 32 participants — from two!

In five to eight years, I wondered, what would the impact of these technologies be in Africa?


Not too long ago, a group of us went to visit a friend deep in rural eastern Uganda over a Christmas holiday, to have lunch with his family and mum. He was living plonk in the 21st century but totally off-grid — he was mining his own water, generating power from solar and had pay TV in a house planted in the middle of rocks looking like the ones you see on the coast of Greece.

On the way to his place, we passed roadside markets where solar panels were being sold alongside beans, tomatoes, potatoes and live chicken. Grass-thatched houses gleamed with solar panels on their roofs, a feature that is spreading rapidly around Africa and, perhaps, more dramatically in Kenya.


Not too long ago, I was in the middle of what those who don’t know better would call dead-end Pokot — in a small town and surrounding villages where every house had solar and the owners used solar phones. Inside, a strange wire dangled in nearly all corners — for charging phones.

Solar in Africa, then, is not just about energy. With the possibility of energy for so many many more people who would have been off-grid at low cost, it also becomes a platform for organising lives in new ways beyond the infrastructure provided by the State.


And so, if we look just around the corner, where we have not only cheaper internet but several times faster internet and applications that allow 32 people — and, by then, possibly 100 — to join a conversation, then the “digital secession” we wrote of before will reach extremely disruptive levels.

You could hold a meeting of your family and all the in-laws live while eyeballing everyone. You could have a chama meeting with quorum on FaceTime. And you can connect all the relatives abroad who couldn’t travel for a dear uncle’s burial to the event on a device in your palm.


Already, messaging apps such as WhatsApp have proved powerful platforms for everything from benign stuff like talking sports to potent and deadly endeavours like mobilising to win — and steal — elections, spreading hate speech, organising to finish off rivals and organising street action against a bad government.

With promising super-fast feeds and fast low-cost internet, we shall be able to broadcast to close-knit groups. The bishops will not approve of some of it, because you can broadcast live pornography, for example, although in very socially liberal contexts it will be a new revenue stream for some.

But you can teach a class, or broadcast a play, off your mobile device at virtually no cost. It might also be good for democracy and human rights because you can get more people to see your live recording of police brutalising protesters and an official taking a bribe.

People will continue to watch national TV, but far fewer. There will be a shift of power. The president will get on fewer and fewer of the channels that broadcast “news”, driven by off-grid energy and everything else.

There will be new figures of authority, and allegiances away from the ‘Big Men’ — of business, State, Church, Mosque.

It will be a wonderful time to be alive.

Mr Onyango-Obbo is the publisher of and explainer @cobbo3

Why lifting of rhino horn ban should worry Kenya

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Kenya, like most other African countries hosting the last remaining herds of pachyderms, has a reason to be worried following a decision by China to reverse the ban on trade in tiger bones and rhino horns. Reports show that Beijing has allowed trade in products from these endangered animals in “special circumstances” including medical research or healing.

Depending on who you ask, the number of rhinos in the world today is between 20,000 and 30,000. None of the rhino species (that is Javan, Sumatran, Black, Greater One-Horned or White) is native to China which had banned sales of rhino products, since 1993.

Those who say that dropping the ban and allowing for farmed trade would create a cover for poachers and smugglers to continue killing the unique species, have a point, if the price of rhino horn is anything to go by.

Weighing between one and three kilos, rhino horns are more expensive than gold or cocaine as they can fetch as much as Sh30 million in countries such as Vietnam where many believe they cure cancer and hangovers. In China, rhino horn-based medicine especially for fevers and liver problems are said to have been first prescribed more than 1,800 years ago.

It is interesting that in the early 1990s, rhino horns fetched between Sh20,000 and Sh26,000. Few of the animals were killed then. However, as media reports show, this changed in 2008 following a rumour that swept Vietnam in the mid-2000s that rhino horn powder had cured cancer afflicting a Vietnamese politician. Though this was a mere rumour, it led to the killing of the last rhino in Vietnam in November 2011.


Although experts in Chinese traditional medicine rule out rhino’s reputed cure for cancer, an investigation by Swiss filmmaker Karl Ammann recently demonstrated that black market of rhino horns in China is driven by a rise in wealth — many are buying rhino horn products to flaunt their wealth. Reports show that Chinese millionaires grew from 188,000 to 719,000 in only a decade and that China now contributes most millionaires in the Forbes list. With such a rich population, that partly shows it by acquiring extremely expensive animal parts, there is no guarantee that China will be able to control trade of rhino horns.


More importantly, there is no guarantee that China’s move will not encourage rhino poachers and especially the highly specialised and capacity-endowed international crime rings. This has happened in Europe where crime rings have been invading zoos and museums to steal rhino horns. For instance, media reports show in 2011, spirited thieves went on what was dubbed “rhino-head heist spree” across Europe by raiding museums and auctions houses in seven countries leading to 30 investigations by Europol.


Kenyans, and especially conservationists, should be greatly worried with the decision because the population of Chinese in the country has been growing. Although most of them have not been associated with criminality or poaching, a few have. For instance, in January 2014, a Chinese ivory smuggler was slapped with a 20-year jail term while earlier in 2008, Chinese road builders were linked to poaching, a claim that was denied by Chinese embassy.


At the same time, the Kenya Wildlife Service (KWS) has been in shambles over the last few years. This has greatly affected its ability to police the country’s protected and non-protected areas. In its report, the Task force on Wildlife Security revealed that KWS’ intelligence gathering unit was weak and employed outdated methods of gathering, analysing and disseminating information.

EU gives Sh5bn for Nairobi Bus Rapid Transit

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The Sh9.6 billion Nairobi Bus Rapid Transit (BRT) project got a major boost on Wednesday after the European Union (EU) committed a Sh5 billion grant towards its implementation.

The project, which was launched in 2015 by President Uhuru Kenyatta, has been on hold for lack of funds to buy high-capacity buses and support infrastructure.

EU Ambassador to Kenya Stefano Dejak said the money will be used to develop and install BRT supporting infrastructure in three years.

“The one thing that Nairobi needs is to have an effective BRT system. That is why EU has invested a Sh5 billion grant to make sure you the people of Nairobi will have an effective, safe, not polluting, not jamming, bus transport system,” said Mr Dejak during the occasion to mark the World Cities Day in Eastleigh Wednesday.

About Sh7 billion of the amount will be used to develop five BRT lines and installing the necessary infrastructure while Sh2.6 billion will be used to procure 50 high-capacity buses.


The national and county governments will foot the remaining Sh4.6 billion — for the full implementation of the project which will see installation of other link roads such as Likoni, Enterprise, Lusaka and Parklands Ring roads as well as a walkway on Rabai Road.

Speaking at the same event, Nairobi Governor Mike Sonko said his administration will ensure that the initiative is fast-tracked to meet the laid-down deadlines.


He said that after the completion of the BRT system and introduction of commuter rail services, passengers and commuters should be able to access bus and railway stations safely by foot or by cycling, adding that the Nairobi non-motorised transport policy states that all new projects must include provision of safe walkways and cycle lanes.

“As the co-chair of Nairobi Regeneration Committee, of which President Kenyatta is the chair, I will not tolerate any laziness in implementation of projects funded by the EU,” said Governor Sonko. The event also marked the launch of the 2.2 kilometre General Waruinge-Juja Road-Thika Superhighway link road which is among the 16km link roads in the city that the EU is funding to ease traffic flow in Nairobi.

Nepad: Raila’s political support key for Africa's integration

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The African Union’s key programme implementing agency has said the appointment of Opposition leader Raila Odinga as special envoy for infrastructure could help speed up integration.

The New Partnership for Africa’s Development (Nepad), which facilitates and coordinates the development of continental programmes, said Mr Odinga’s experience and general political support across Africa is a key resource to mobilise communities to support the vision to open borders and connect countries with infrastructure.

“I am absolutely confident that the high representative is more than capable of assisting the continent to tackle its infrastructure challenges, since he has the comparative advantage of being technically knowledgeable in this field and he also has the requisite political backing,” said Dr Ibrahim Mayaki, CEO of Nepad in Johannesburg, according to a statement released on Tuesday evening.

Dr Mayaki spoke after welcoming Mr Odinga to the agency for the first time on Tuesday since he was appointed as the African Union High Representative for Infrastructure. He said the African Union Commission and Nepad are fully committed and ready to support Mr Odinga.


Nepad often facilitates joint projects as well as mobilising resources and engaging the global community, regional economic communities and countries in transforming Africa, according to its website. Some of the projects include regional power grids and transportation networks. And the AU sees it as key to Africa’s Agenda 2063 goals, through which the continent hopes to build more connecting roads, railways, open borders and provided adequate electricity to homes among others as part of an overall integration project.

In Johannesburg, the ODM leader stepped out of local politics, calling on countries in Africa to support integration. “I believe that African countries should be able to trade freely among themselves through the African Continental Free Trade Area, and the skies should be open through the Single African Air Transport Market,” Mr Odinga said, according to a speech shared with the media.

He added: “For all this to happen, we need to stay focused on the priority infrastructure projects. Having an integrated approach will help us realise quick wins.”

Mt Kenya leaders present demand list to Uhuru

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President Uhuru Kenyatta will Thursday meet Mt Kenya lawmakers to deliberate on their grievances on unfair distribution of resources and request that he should continue being the regional kingpin even after his term ends in 2022.

The Head of State will meet the leaders at the residence of Regional Commissioner Wilson Njega in Nyeri town before he proceeds to open the Karatina Market in the afternoon.

The meeting was confirmed Wednesday and details communicated to the leaders.


An MP who declined to be named said the Central region lawmakers led by Cecily Mbarire and nominated Senator Isaac Mwaura, who are the leaders of the caucus, will present their demands to Mr Kenyatta.

“We will meet the President at 11am. Ms Mbarire will present our petition and the resolutions from our meeting. We are grateful that he is ready to listen to us because our concerns are legitimate,” said the MP.


The region overwhelmingly voted for President Kenyatta and his Deputy William Ruto but, according to the elected leaders, the Jubilee government has not reciprocated the support. Top on the list of demands is change in the formula used to allocate cash to counties and constituencies.

“Within the context of the Constitution, why aren’t we getting development funds commensurate with our investments,” argued Gatundu MP Moses Kuria Wednesday.


The MPs, during a retreat in Naivasha on Monday, claimed that other regions were being favoured while Mt Kenya region had been neglected.

Part of the lawmakers’ demands include that President rescinds his decision to freeze new projects. In July this year, the President gave an order stopping new projects until stalled and ongoing ones are completed. The directive has hurt the political careers of first-time MPs who made promises to push for new projects once elected.

“Now, we have been elected and the President’s directive has made it difficult to lobby for those projects,” said an MP.

The MPs also want to hold frequent meetings with the President amid an uproar that he has become inaccessible compared to his deputy.

“All other regions have had an opportunity to meet him. We are only saying that we also have a stake in this country,” he said.

Mr Kuria, in an interview on NTV, said they will raise with the President the issue of slow pace of implementation of projects by Cabinet Secretaries.


Kangema MP Muturi Kigano said the meeting will not be political but will focus on lobbying for increased allocations to Mt Kenya region. “We need development. It will not be political but we just do some housekeeping,” he said.

In demanding the lion’s share of national resources, the 67 MPs said they contribute more to the economy than what they were getting.

“Mt Kenya must claim its rightful share within the remaining four years of the current administration,” said Ms Mbarire.