Sunday, 6 June 2010

Kenyan donor money and firms helping build S. Sudan

Sudan: Donor Money And Firms Helping Build South
Report from Daily Nation On The Web (via AllAfrica) by Murithi Mutiga - Saturday, 5 June 2010:
(Nairobi) - Kenya is accustomed to being a recipient of aid. But in its relationship with Southern Sudan, it is playing a new and unfamiliar role: That of donor country.

The government is investing millions of shillings to set up new administrative structures in the South, underscoring the importance it attaches to its relationship with the government in Juba.

Kenya has given US$5 million (Sh400m) to boost the capacity of the South's civil service and has sent dozens of its own experienced public officials to train their counterparts across the border.

Most of this assistance is motivated by strategic calculations based on the expected outcome of a referendum on self-determination expected in Southern Sudan next year.

Opinion polls and Sunday Nation interviews with key leaders in the region indicate the referendum is overwhelmingly likely to result in the breaking up of Sudan, continent's biggest country, to establish Africa's 54th state.

Such an outcome would have a major impact on the economies of neighbours Kenya, Uganda and Ethiopia. The three are locked in a race to cement their influence in Southern Sudan and are working to position themselves to benefit from the likely emergence of the new state.

Foreign Affairs minister Moses Wetang'ula said the government would respect the outcome of the referendum.

"Kenya has always played a neutral role. Down the years, we hosted the Sudan embassy and the offices of the Sudan People's Liberation Movement (SPLM). That is why we were chosen to host the peace talks. As part of the deal that ended the fighting, both parties were supposed to work to make unity attractive. The referendum is a key component of the peace agreement, and we will be happy to recognise a result that endorses unity or one that leads to separation," he said.

While Kenya has long been criticised for punching below its geopolitical weight in its approach to foreign policy in the region, it is employing an unusually muscular approach in Southern Sudan. It has spent millions of shillings and expended considerable diplomatic capital to take advantage of the opportunities opening up in the region.

According to a new report by the International Crisis Group titled Regional perspectives on the prospect of southern independence, Kenyan investment in Southern Sudan is substantial.

A Southern Sudan Liaison Office has been set up at the Office of the President in Nairobi. The unit, the report says, is "dedicated to supporting the Government of South Sudan (GoSS) and the SPLM. Led by diplomats with knowledge of the Sudan file, its mandate includes monitoring the Comprehensive Peace Agreement, advising President Kibaki and serving as the principal liaison for the majority of official interaction with Juba. It also advises Kenyan business interests and facilitates commercial links between investors and the GoSS."

The Kenya Institute of Administration, which is the traditional training centre for civil servants in Kenya, has set up a campus in Juba to contribute to training programmes in the region.

According to the ICG, Kenyan civil servants are taking part in a separate training programme run by the United Nations Development Programme.

Legal experts from Nairobi are working with the parliament in Juba to help in drafting legislation, while Southern Sudan "regularly sends senior ministry officials to Nairobi where they shadow their Kenyan counterparts".

Military ties

The report says there are also significant and growing military ties between the two partners.

"The Kenyan army trains SPLA (Sudan People's Liberation Army) officers and provides other technical support, including several de-mining classes at the International Mine Action School in Embakasi. It also maintains a rotating battalion of peacekeepers in the South as part of the UN Mission in Sudan (UNMIS)."

Mr Wetang'ula says this deep relationship is explained by historical circumstances.

"Kenya hosted more than 100,000 Southerners during the civil war. Most leaders of the SPLM maintain their homes in Nairobi, and their children study here. The people in the South also feel a greater affinity to people in the East African region because of shared roots, perhaps more than they do with their brothers in the Arab North."

The minister said the relationship is not driven solely by Kenyan economic interests in the South as ties between the two will be "mutually beneficial".

Economists say the potential benefits for Kenya in the event the South votes for separation are staggering. "This is a potential game changer," said investment banker and analyst Aly-Khan Satchu.

"Kenya's economy rides on the coattails of its neighbours, and two events in the recent past will mean the economy will never be the same again. Uganda's expected revenue from oil is 20 times more than their current Gross Domestic Product while Southern Sudan presents massive opportunities."

Mr Satchu said the South's potential should not just be viewed through the lens of potential oil revenue, which has hovered between the US$1.5 billion (Sh120 billion) and US$ 2 billion (Sh160 billion) mark in the last five years.

"It is widely thought that the South is not getting its fair share of oil revenues from the North under the current agreement, so they may end up getting far higher income after the separation. But there is far more potential in the region. There are vast untapped gold deposits, and there is great potential for agriculture.

The South needs a route to sea, and Kenya will be able to offer that. The question is whether we can complete the infrastructure programmes necessary fast enough to take advantage."

The centrepiece of Kenya's efforts to take advantage of the looming independence of the South is the Lamu port, which is expected to cost about Sh1.2 trillion.

The Chinese-built facility would ease dependence on the port of Mombasa, which has been criticised as inefficient by officials in many neighbouring countries that depend on it.

A railway line from Juba through Isiolo and Lamu is also planned as is a 1,400-km pipeline from Juba to the Lamu port. Japanese firm Toyota Tsusho has expressed an interest in building the $1.5 billion (Sh120 billion) line, which would provide Southern Sudan with a more attractive export route than the existing 1,600km line to Port Sudan in the North.

These ambitious projects have been billed as having the potential to treble Kenya's export income. But a familiar challenge stands in the way.

Demands by senior government officials for large bribes before they commission many of the projects have delayed implementation, to the frustration of officials in Southern Sudan and other governments in the region.

Several western diplomatic sources and a number of government officials with knowledge of the matter who requested anonymity said Kenya has a direct interest in completing the projects, but corruption was stalling implementation.

While Uganda has nearly completed repairs of the Gulu-Juba road which is an important transport link to the region, Kenya is still in the commissioning stages for its railway projects and a feasibility study on the Lamu port is only now being undertaken.

Cohesive team

Mr Satchu says government officials must work in concert to implement these initiatives.

"We need more proactive management on a day to day basis. We don't seem to have a cohesive team on the ground working to advance Kenya's economic interests. We have major infrastructure deficits. Considering how clear the economic benefits of implementation of these projects are, we should be working far more proactively."

Like Uganda, Kenya has sent thousands of skilled workers to Southern Sudan, and it will have to work to avoid creating the impression that it is benefiting disproportionately from the economic opportunities in the South to the exclusion of locals.

The weak level of non-oil exports from Southern Sudan is partly blamed on the resource curse which diminishes productivity in other sectors in some Third World countries.

The prominent academic and blogger John A. Akec has lamented this situation.

"In the last five years, establishing a system to collect taxes has been slow. Development of other means of income has not started. We imported everything from chicken, to tomato, to razor, to toilet rolls from Uganda and Kenya; and exported nothing to them. We sent our children to Uganda and Kenya for their education, and rushed there ourselves when not feeling well to buy the medical services from these countries or travel further afield in quest for medical treatment. Seventy per cent of South Sudan income was paid out as salaries in the public sector, while getting nothing back by the of way economic output."

Kenyan officials say they are trying to help the South diversify its economy by investing heavily in manpower development and training programmes.

Mr Wetang'ula pointed out that Kenyan educational institutions do not charge a higher fee for students from the South, which is the practice for students from outside the East African Community.

The efforts to boost cultural ties, he said, were also demonstrated by the opening of a University of Nairobi campus in Lokichoggio on the Kenyan border with the South. The biggest population of students there is Southern Sudanese.

But all the bets on a major leap in economic ties may fall through, however, if the North and the South do not respect their obligations under the Comprehensive Peace Agreement.

So far, both sides have largely respected the deal. But some southern ministers have warned that they will demand a unilateral declaration of independence if anything happens to disrupt the referendum, something which Kenya has cautioned against.

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