Kenya and Japan sign final deal for the construction of Mombasa commercial and industrial hub.
The signing of the deal is good news for the port town that has been recording dwindling fortunes.
Project expected to spur growth in the port town of Mombasa as it unlocks over 60,000 jobs.
Coast residents have a reason to smile after the government signed the final agreement with Japan for the construction of the Dongo Kundu Special Economic Zone (SEZ), which will unlock more than 60,000 jobs.
This now sets the pace for the compensation of residents, who will be affected by the project. This also opens room for lobbying and jostling for investment opportunities by firms seeking to reap from the project.
Kenya is expected to sign the a final print of the Sh41.07 billion deal with Japan to build the industrial and commercial hub in Dongo Kundu, Mombasa, in December.
This comes as a win for Mr Hassan Joho’s administration that has been vouching for the project as an alternative to the lost port business.
The signing of the deal is good news for the port town that has been recording dwindling fortunes, with a study by the University of Nairobi (UoN) released on Friday indicating that the economic state of Mombasa is at ‘economic decay point.’
The study indicates that container freight stations, long distance truckers and transport-related businesses such as fuelling and service stations are mostly affected.
The study showed that Mombasa had lost more than Sh17.3 billion since the Standard Gauge Railway came into operation, and the shift of clearance to the Nairobi Inland Container Deport (ICD).
The Nation has learnt that the final Memorandum of Understanding was signed between Kenya and Japan on the sidelines of the Tokyo International Convention on Africa Development (Ticad) in Japan on August 30, for Sh41.07 billion ($391 million) of which Sh35.29 billion will be a loan, while Sh5.77 billion will be a grant.
“Treasury will sign the final print on the funding later in December in Nairobi, upon which the project will be ready to start. The two governments are working with a June 2020 date for the groundbreaking,” a source told the Nation.
The loan and grant, it is understood are expected to automatically end within a period of three years, after the completion of the project.
A fortnight ago, Governor Joho asked President Kenyatta to consider hastening the SEZ as an alternative to lost port business, a request the Head of State promised to push for in his late August visit to Japan.
“I’ll be leaving for Japan and besides the main deliberations, we shall engage the Japan government to partner with us to fund the project which will create thousands of jobs to Mombasa people. This is an opportunity to ensure Mombasa flourishes in business. We should not be focusing on old projects like [the] Port of Mombasa, but more viable projects,” President Kenyatta said.
The first phase of the SEZ that is expected to offer a facelift to the coastal town as regards infrastructure and business, should be ready by June 2022.
“The government of Japan will finance the basic infrastructure of phase one through a concessional loan of Sh35.29 billion at a rate of 0.1 per cent and grant assistance of Sh5.77 billion,” the MoU says.
Mr Joho has been vocal on the execution of the Dongo Kundu Special Economic Zones as the regions alternative to dwindling fortunes brought forth by the shift to SGR and the use of the Nairobi ICD, as the main clearance hub for goods.
“Dongo Kundu SEZ would create hundreds of thousands of jobs. As it is, the port is very dear to us, but I can tell you, if the SEZ is to happen today, it would employ 10 times what the port is currently employing.
“It’s our responsibility as leaders to ensure this dream is realised,” Mr Joho said.
The Dongo Kundu SEZ industrial and commercial hub, expected to sit on 1,326 hectares, is part of the master plan for the development of the Mombasa SEZ that was conceived four years ago with Japanese help.
Efforts to get a comment from Transport and Infrastructure Cabinet Secretary James Macharia on the project were futile as his calls went unanswered.
However, Kenya Ports Authority Managing Director Daniel Manduku confirmed that an MoU was signed. He noted that KPA would guarantee the loan as they seek to have the contractor on site before next June.
“We were given two conditions to meet before the groundbreaking of the project. We are to complete the Environmental Impact Assessment report; and hasten the resettlement plan for the 3,000 acres,” Dr Manduku said.