Minister cautions US investors over deals with counties

Tourism Cabinet Secretary Phyllis Kandie holding talks with American tour operators in New York. The Tourism ministry has earmarked Sh900 million for revamping the ailing sector. FILE PHOTO | NATION MEDIA GROUP

What you need to know:

  • Trade and Tourism Cabinet Secretary Phyllis Kandie on Wednesday said that legally, county leaders cannot offer tax relief to investors.
  • They can only offer free land after their respective county assemblies approve of such moves.
  • The national government is planning a conference with governors at the end of July 2014 to agree on incentives counties can extend to investors.
  • Mr Kamau emphasised that the national and county governments were interdependent.

WASHINGTON, DC

US investors have been cautioned against rushing to seal business deals with governors and other county leaders without double-checking the offers with the national government.

Trade and Tourism Cabinet Secretary Phyllis Kandie on Wednesday told the "Doing Business in Kenya" conference that legally, county leaders cannot offer tax relief to investors, except on property tax.

They can only offer free land after their respective county assemblies approve of such moves, she told more than 150 investors in Washington, DC.

“Devolution is one year old and talks are under way to address teething problems. I would urge you to cross-check with the Ministry of Foreign Affairs to ensure such offers are within the law,” she said.

The national government is planning a conference with governors at the end of July 2014 to try to agree on the incentives the leaders of the 47 devolved units can extend to investors.

HELP INVESTORS

Kenya Investment Authority Managing Director Moses Kiara said the devolved units do not have the authority to offer fiscal concessions to potential investors, and pledged to help investors who might have already signed such deals.

“Not all governors have understood devolution laws. We will sit down the governors and the affected investors and see what we can do,” he said.

Public-Private Partnerships Unit Director Stanely Kamau said his agency was working with USAid to help American small-scale investors to identify investment and partnership opportunities in the counties.

He also urged the investors to involve the national government in their investment transactions.

“When contingencies arise, you will not deal with the counties, you will have to come back to the national government,” he said.

INTERDEPENDENCE

Mr Kamau emphasised that the national and county governments were interdependent, adding that the devolved units were not autonomous.

“One of the governors was actually being impeached because he failed to follow the procurement rules,” he told the investors.

The national government leaders were categorical that the investment opportunities they were seeking in the US political capital were not for a particular region of Kenya and urged the investors to talk to them over tax holidays and other monetary incentives.

They made the statement after some businesspeople demanded to know how Wednesday’s meeting was different from the ones some governors had held before in the US.

The conference, organised by the US Corporate Council on Africa and the Kenyan embassy in Washington, came weeks to the US-African leaders’ summit in Washington.

President Barack Obama is expected to meet more than 40 African presidents and heads of state at the meeting scheduled for August 5 and 6, 2014.