[kictanet] Kenya opens door to foreign telecoms investors

[John Maina]

----- Forwarded Message ----
From: nmatunda <matunda at hotmail.com>
To: picta-kenya at yahoogroups.com
Sent: Sunday, October 12, 2008 3:14:36 PM
Subject: [picta-kenya] Re: Kenya opens door to foreign telecoms investors


Mike,

I am with you 200% on this.

Every country must always act in its self-interest; this move by the PS is deplorable and not in line with long term Kenyan interests, especially in as a lucrative area as ICT.

In my books, we invite foreigners for such things as (a) financing (which by the way Kenyans have shown can be raised locally), (b) operations and management experience & knowledge transfer, (c) relationships that we can leverage through any such joint ventures, etc. Joint ventures can also cushion enterprises from predatory illegalities, especially given our weak legal dispute resolution structures! Of the latter, remember when heads of state corporations used to queue up with money bags to state house to prop up the Moi excesses! Or when companies could be shaken down for political donations at a whim!

For me, a good (not ideal!) joint venture is one of the kind that Kenya Airways went into with KLM, when KA had been run down by politically connected individuals. KLM brought in management and operations experience, facilitated KA's access to markets and routes that KA otherwise couldn't easily access and in the process the KA brand rose, as did profits and more! The investment has paid well for Kenyans and KLM; a win-win. 

There is a lesson to be learnt from the current American financial crisis with respect to experiences in Canada. This country has been under pressure to deregulate its financial services sector for the longest time. Banks have argued that they needed mergers to allow them to compete globally; and that they needed global partners that would help them grow and extend their reach.

Canadian government have constantly refused mergers or the kind of deregulation the industry sought! Their argument: the interest of the common person whose priority banks should be. 

Guess what? In the present crisis, Canada has come substantially well ahead of the US and others. And for what reason: they stood against unfettered deregulaion! and they stood up for the interest of Canadians.

I ask all yee this question: who is standing for the interest of Kenyans in this open invitation to exploitation?

Dr Ndemo needs to be stopped, I am afraid!

Unedited.

Matunda Nyanchama
--- In picta-kenya@ yahoogroups. com, "matunda25" <matunda at ...> wrote:
>
> 
> --- In picta-kenya@ yahoogroups. com, "matunda25" matunda@ wrote:
> >
> >
> > --- In picta-kenya@ yahoogroups. com, "Mike Theuri" mike.theuri@
> > wrote:
> > >
> > > Once again the PS uses the Econet fiasco to put foreigners ahead of
> > Kenyans
> > > while failing to acknowledge that the failure to pay by Econet was a
> > result
> > > of failure within his own docket and the regulator.  Ndemo and the
> > regulator
> > > illegally licenced an operator whose financial books were in the red
> > and
> > > that by extension it was obvious that there was no sane bank that
> > would
> > > have funded the local component of the consortium if the foreign
> > component
> > > was in such poor financial health. The regulator simply failed to
> > conduct
> > > its fiduciary duties to the Kenyan public by failing to conduct
> proper
> > due
> > > diligence on the licencee.
> > >
> > > A sworn affidavit by the Econet CFO backs these facts when it states
> > that
> > > the company had no money to the extent that an unscrupulous european
> > vendor
> > > (acting in an anti-competitive manner possibly contrary to EU
> > anti-trust
> > > regulations) sold equipment worth $15m for $15,000 which was the
> only
> > way
> > > the licencee could go to a bank to present an "asset" as their
> balance
> > sheet
> > > was useless in this regard (see extract of affidavit page 13, item
> > 17.1).
> > >
> > > These are the types of foreigners the PS is so eager to fight for at
> > the
> > > expense of the progression of indigenous Kenyans. The PS blames
> > ordinary
> > > Kenyans but conveniently forgets that some well known international
> > > operators pulled out of the SNO tender without submitting a bid
> > because of
> > > the known shenanigans of public relations exercises where a winner
> is
> > > already known long before a tender is announced.
> > >
> > > How does Kenya stand to gain when investors are 100% foreign? Are
> they
> > > Kenyans masquerading as foreigners mobitelea style waiting to
> receive
> > the
> > > licence he plans to issue in 18 months? Are they the Libyans Ndemo
> > > promised access to the Kenyan economy when he signed away access to
> > the
> > > Kenyan economy?  Countries such as India which the PS fondly refers
> to
> > as
> > > newly industrialized countries demand that foreign investors engage
> in
> > joint
> > > ventures with local companies particularly in key sectors such as
> ICT.
> > >
> > > Today, India's Tata is a well known brand as a result of such
> forward
> > > thinking policies that result in the transfer of knowledge and
> > technology,
> > > not to mention indigenous wealth creation.
> > >
> > > Who are the foreigners the PS is eager to let into the country? He
> > seems
> > > star struck with foreigners unfortunately, considering his signature
> > was
> > > amongst those that signed the agreement that brought Libyans into
> the
> > > country.
> > >
> > > In 2006 Justice Ibrahim Mohammed ruled that the Econet licence
> > remained
> > > cancelled, but the PS continues to blantantly bulldoze the way for
> > > foreigners by trampling all over a bonafide court ruling (attached)
> > which
> > > is sympomatic of the culture of impunity that the PS' actions
> embrace.
> > >
> > > This is the same case that the PS attempts to mislead the public was
> a
> > case
> > > that was settled. How would the government be settling a case in
> which
> > a
> > > Judge had already issued a final ruling? Is the PS telling the
> public
> > he is
> > > above the law? Another fallacy put forward is that the case was
> > between KNFC
> > > and Econet, it is quite clear that the case was between Econet and
> the
> > > Government and the Government (including the regulator) won a ruling
> > that
> > > stated that the Econet licence remained cancelled. So which licence
> > are
> > > Econet operating on? There was only one gazettement ever done in the
> > history
> > > of the licence, so there can only be one licence that a court of law
> > > ruled was to remain cancelled.
> > >
> > > At times one could be forgiven for thinking that the PS is a foreign
> > agent
> > > working for the interests of foreign paymasters. The Safaricom IPO
> > proved
> > > once and for all that local investors have the means and capacity to
> > invest
> > > in the right ventures if the playing field was leveled and special
> > interests
> > > were kept to the sidelines. Instead the PS would like to paint
> Kenyans
> > as
> > > hapless investors who must look to foreigners to increase their
> > already
> > > strong stranglehold on the Kenyan economy.
> > >
> > > ---------
> > >
> > > Several agreements between the two nations accorded Libya
> preferential
> > > access to
> > > invest in Kenya's oil and hotel sectors and guaranteed legal
> > protection of
> > > acquired properties.
> > >
> > > Murungi and Information PS Bitange Ndemo signed the agreement
> > proposing to
> > > allow
> > > Libyans to buy and upgrade the refinery, establish a new pipeline
> > between
> > > Nairobi and Mombasa and build storage and handling facilities for
> > Liquified
> > > Petroleum Gas.
> > >
> > > They also signed a memorandum promising to consider Libya Africa
> > Investment
> > > Portfolio (LAP) and its subsidiaries' bids to buy the Grand Regency
> > Hotel
> > > and
> > > co-own now sold Telkom Kenya and The East Africa Marine System
> (TEAMS)
> > fibre
> > >
> > > optic project.
> > >
> > > http://www.eastanda rd.net/InsidePag e.php?id= 1143990641&cid=4
> > >
> > >
> > > http://africa. reuters.com/ business/ news/usnJOE4950W H.html
> > > Kenya opens door to foreign telecoms investors
> > > Mon 6 Oct 2008, 12:58 GMT
> > >
> > > [-] Text [+] By Duncan Miriri
> > > NAIROBI (Reuters) - Kenya will scrap a law requiring foreign
> telecoms
> > > investors
> > > to have local partners because it has choked funding for the
> > fast-growing
> > > sector, the government said on Monday.
> > >
> > > Previously, foreign firms that wanted to invest in telecoms projects
> > in east
> > >
> > > Africa's biggest economy needed to find Kenyan partners who would
> own
> > > between
> > > 20-30 percent of any venture.
> > >
> > >  "This rule is messing us up in terms of investments. There are
> large
> > > companies
> > >  which want to invest in this country without partnering with other
> > >  individuals, " Bitange Ndemo, permanent secretary at the Information
> > > Ministry,
> > >  said in an interview.
> > >
> > > "We must do everything to bring more foreign direct investment to
> this
> > > country,"
> > > he told Reuters. He did not give a date when the change would come
> > into
> > > effect.
> > > Ndemo said the government was considering issuing another mobile
> > operator
> > > licence in about 18 months time.
> > >
> > > "We want those who are in place to recoup their investments, and at
> > the same
> > >
> > > time we will study the market and see whether it is working
> > efficiently, " he
> > >
> > > said.
> > >
> > > Kenya's Safaricom is the market leader followed by Kuwait's Zain.
> The
> > only
> > > fixed-line operator, Telkom Kenya, which is majority owned by France
> > > Telecom,
> > > launched mobile operations last month under the Orange brand.
> > > A fourth licensee, Econet Kenya, is expected to launch its service
> in
> > > November.
> > > Ndemo said competition was driving down prices for consumers and
> > encouraging
> > >
> > > providers to expand coverage quickly.
> > >
> > > "That is why we predicted that in the next three years we would have
> > more
> > > than
> > > 60 percent penetration rate, and that would be the highest in
> Africa,"
> > he
> > > said.
> > > He said there were now 14 million subscribers in Kenya, out of a
> total
> > > population of about 36 million.
> > >
> >
>
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