Economist Faults KeNHA Decision to Reserve Tenders for Chinese Nationals


Economist Mohamed Wehliye on Wednesday, February 7, faulted President William Ruto’s administration for replicating mistakes of the previous regime on the tendering process. 

Wehliye explained that the recent advertisement by the Kenya National Highways Authority to reserve tenders for the establishment of the Nairobi Intelligent Transport System (ITS) to Chinese nationals was a recipe for economic downfall. 

On Tuesday, KeNHA stated that bidders and all other parties constituting the bidder shall have the nationality of China. 

“A Chinese bank finances a Chinese company to build stuff in Kenya and the Chinese bank pays a Chinese contractor in China,” Wehliye explained why the plan was faulty from the start. 

President William Ruto shakes hands with his Chinese counterpart Xi Jinping on October 18, 2023

PCS

“Money never arrives in Kenya. Chinese contractor imports materials from China and dents our currency.” 

In explanation, for example, if the contract is worth USD1 billion since the contractor and the financier are both in China, there is no particular point in time that the USD1 billion will hit any Kenyan bank account. 

Wehliye explained that due to this factor, Kenya will be seen to be growing economy-wise (due to the infrastructure projects) but this will not translate into local cash flow. 

Using the hypothetical USD1 billion loan, at the end of the maturity period, Kenya will be forced to service the advanced amount. 

This is despite the money never having traded in the Kenyan market. Considering Kenya will have to pay the loan in dollars, it will devalue the local currency since the country will have no foreign exchange reserves to tap into. 

“We will use our domestic revenues to pay the dollar debt and hit our currency,” Wehliye stated noting that Kenya would be losing at every level.  

Wehliye further wondered why KeNHA made the advert in Kenya when only Chinese nationals were required to apply. 

Kenya has undertaken several multibillion projects using the same formula including the Standard Gauge Railway and the Nairobi Expressway. 

An aerial view of the Nairobi Expressway SGR toll station and the old Mombasa Road.

Photo

Moja Expressway





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