One of the most usual complaints by the business sector is the state of infrastructures in Kenya. Why does a country so developed in so many aspects have deficiencies in such vital aspects to the development as transport and communications?
First of all I would like to say that I deal with the railways and air transportation. I do not deal with the road infrastructure. I think it is important to say something about it. We agree that our road infrastructure is not very good. There are many factors contributing to this. Our economy has not been at its best in the last five years. Our problems with international donors, like the IMF has been delaying a bit. El Niño weather disaster has devastated our roads system, even the railway network, which is also very important because our railway goes right through into Uganda, Rwanda, Burundi and into the Great Lakes Region. We are now in the process of raising money locally through our own budgetary system and will probably borrow some from international donors in order to be able to improve our road infrastructure system as well as the railways. Our air transport system is very good; our airports are very good. We think that is quite a success. Now that COMESA is in, the summit had agreed that we should open up the skies, the COMESA airways so that all the airlines can participate in the transport of business and cargo etc. That is something about our infrastructure.
Most of the strategic organizations under your ministry are bound to be privatized: Post and Telecommunications, Port Authorities... At what stage is the privatization of these companies and what efforts is your Ministry doing to accelerate their sale?
We are at a very advanced stage in privatizing the telecommunications system. We are in the process of separating the Telkom (telecommunications) and the postal services, which I think is a pre-requisite for starting the privatization process. We have appointed a regulatory body called Communication Commission of Kenya, which is going to license all the telecommunications operators countrywide. I think it is a very big step indeed because this licensing process is going to make sure that private people and private operators are licensed all over the country. We are dividing the country into regions so that we can give everyone a region and we hope that through these computer businesses the network will be improved. So in the telecommunications sector, we are moving very fast. By June 1999 post and telecomm will be split, creating a new company called Telkom Kenya Ltd.
When we talk about telecom we also have the cellular phone which, right now is a monopoly in this country. It is very expensive either to own one or to use it. Since it is a monopoly so you cannot blame them for wanting to make as much money as quickly as possible. Right now we hope that through this regulatory body we will be able to license another two cellular companies. At present we are definitely going to license another one, the second one. There is a possibility of licensing a third one. Uganda has three. There is nothing wrong in licensing a third one. We think it will then be imperative for the tariffs to come down whether anybody likes it or not. They will tumble down and that is exactly what we want to do, so that everybody can be able to use a cellular phone all over this country. In Uganda every taxi driver has got a cellular phone.
We are actually in the process of privatizing the ports and the railways as well. We are trying to do the reconstruction system leading to the privatization process. Our port is very important indeed in serving this country as well as Uganda. It is one of the best natural ports along the Indian Ocean. We have now got some container depots in Eldoret and Kisumu, to facilitate the easy transportation of some of the cargo into Uganda, Rwanda, etc. We are first finishing off with the telecom sector and then we will move to the ports and just see what kind of privatization we are going to initiate soon. We intend to first privatize the berths. We have got 16 berths. 4 are container berths, the other 12 are for general cargo, including vehicles, grain etc. That is where we want to start first.
The El Nino rains badly damaged the railroad network, which has deteriorated ever since due to lack of proper maintenance. Nevertheless Kenya is the communications hub of the region. How are you planning on improving it?
We need a management agreement to start with, to bring up the value of the railway, the line itself, the locomotives, etc, just to raise the value. Right now we have a contract with General Electric (GE). They are refurbishing our locomotives and we hope to bring another group of people who have been doing the railways in the USA for many years. We will probably give them a management contract to try and improve the line. By then we will have raised the value of the whole railway group to be able to privatize when it is in good shape.
You have actually privatized part of the railway network for soda ash mining.
Magadi Soda is a company that deals with soda ash. I do not know the railway length from Magadi to Konza, but it is very well maintained. It is a private efficient little business. But they get a problem when they hit the main railway line to Mombasa on their way down. General Electric is refurbishing their locomotives. They would like to be given some concessions so that they can ease up their flow of cargo down to the Coast.
Some sub-sectors like the air transport are doing very well. Kenya Airways has become the biggest success story in Kenya's privatization process. You have talked about COMESA opening up its skies. When do you think that will happen and what role do you think that Kenya will play in that area?
Kenya Airways is doing very well. It is a privatized business. Like every other business, you foster competition to get better business for the passengers. The summit has approved open-air services business within the COMESA region and Kenya Airways is going to face a bit of competition. As the designated airline we are protecting it, but with other airlines coming in, we can no longer do it. The skies will be opened as soon as possible. We have got an extra year as the designated airline, and after that it will depend on who flies and who gets the license. | The Americans have come here several times trying to negotiate for the open skies system. We are trying to see whether we can organize something on this open and safe skies system. Then we will be connected with the United States maybe through their own airline. Kenya Airways was a bit jittery about allowing the American Airlines to come through, but we cannot be dogs not allowing other people to come and operate here.
There have been some problems with the port of Mombasa, which due to the bad state of the roads was running very far behind, opening the possibility to other ports in the region such as Dar-es-Salaam to compete for the merchandise. How are you planning to improve its performance? Will it be through privatization?
We have had a lot of delays and hold-ups. The clearing of cargo has not been very good or transparent, and there have been a lot of complains. These are the things we are trying to address. It is true that there are genuine complaints about the movement of cargo and how the clearing agents behave. The countries up north are complaining that the containers have been opened and some stuff stolen, etc. These are human problems and maybe they are a little bit widespread around the Mombasa port, but we think we should be able to overcome them as we enter the real privatization stage, where we will privatize the berths and people will take care of their own things.
It is a very real threat that some shipping lines will move into Dar-es-Saalam Port. The only problem right now is that their (Tanzanians), railway line was hit very hard by El Nino. A lot of bridges were washed away. Otherwise, they could give us very stiff competition because some shipping lines think that they have better services and they clear their cargo quicker.
What are the prospect areas of interest for foreign investors?
I would say that the Telecommunications sector is extremely important. It is very attractive all over the world. Everybody wants to come and invest in that area. CCK, as the regulatory body, will have a lot of work in deciding who can come in and who should not, especially when we divide the country into regions. There will be a lot of activity by the operators and people who invest their money into it. We are looking for a strategic investor who will offer technology and know-how. Telecom is going to be a corporation as opposed to being a monopoly for many years. The monopoly culture is very hard to break. Telkoms Kenya Ltd. is going to be a corporate and private company such as Kenya Airways, and we hope to be able to get a strategic investor who will bring in the expertise, the know-how, the money and the technology required to pump in some efficiency. Frankly, investors are too nervous and sensitive about too many things: whether the political environment is good, whether their money will be sucked in by corrupt individuals, etc. We hope to create an environment where the investors will be able to put in their money confidently. In any case in the particular case of Telkom we will be selling 26%, they will just be partners. They will be able to control and direct the whole system, and they will be in the board of directors, etc.
Are you not afraid of selling some companies that are strategic for the security of the country?
There is a risk of losing some degree of security and the control of telecommunications. This is a global business and we should not remain in a small cocoon. Look at Tanzania, Uganda, South Africa, Egypt, etc., they have all liberalized all their telecommunications. We know that there are risks, but we should face them because globalization and liberalization is a whole phenomenon and we cannot hide behind some shadow because the world is exploding into globalization and liberalization. We are going to maintain and make sure that we have got the telecom gateway coming out of our country. There are going to be very many satellites all over Kenya and anybody will be able to speak to anyone anywhere in our country and all over the world.
What is your biggest challenge?
Privatization. It is a very new thing. Until recently the Government has been handling all these institutions on their own and they have been benefiting through taxes, etc. To part with them is a bit difficult; the challenge is that we must make a success of this privatization with everybody's support, including the international community. This is one sector that will revamp the economy of this country. It is a very lucrative sector and people will definitely make money, and there is room for expansion.
Can you give us a final message for our readers?
We are ready for investment. We welcome all investors to come to this country because we have a liberal and open economy and we should be able to foster a good partnership with investors from all over the world. |
