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Make Kisumu mall commercially viable with matter now in court

Tuesday September 10 2019

The new Lake Basin Mall

The new Lake Basin Mall located at the Mamboleo junction in Kisumu. Tenants have been shy of taking up occupancy amid an ongoing investigation targeting Lake Basin Development Authority officials. PHOTO | FILE | NATION MEDIA GROUP 

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In 1993, Jaramogi Oginga Odinga, then the Leader of the Opposition and chairman of Public Accounts Committee of Parliament, found himself facing a barrage of criticism from his opposition colleagues.

He had spoken in glowing terms about the Turkwel Gorge Hydro Electric Project, describing it as an engineering marvel with the potential of boosting the country’s electricity production capacity significantly.


Jaramogi had travelled to West Pokot on an inspection tour of the power station that was at that time regarded as one of the most corruption-ridden white elephants of the regime of former President Daniel arap Moi.

Yet his argument was not without merit. He had been in public life long enough to have witnessed many investments in physical infrastructural that had initially been dismissed as unviable in the short term turn out to have incredibly high returns in the long term.

We in the media shouted ourselves hoarse about Turkwel — how its procurement had been ridden with corruption and the project was economically unfeasible, dismissing it as a typical kick-back-motivated project. Today, the dam is an integral part of our hydroelectric power generation capacity, contributing immensely to the stability of the national grid in the western regions.


We also criticised Eldoret International Airport as unviable and dismissed it as an unsound investment funded by expensive and corruptly committed foreign commercial loans. Yet the is one the fastest-growing cargo hubs in the region.

I make these comments as opening remarks to a discussion on the scandal-ridden Lake Basin Development Authority mall project in Kisumu. This week, prosecution authorities arraigned 19 individuals in the High Court to press criminal charges against them.

What I found remarkable is just how wide the investigators cast the dragnet. It includes tender committee members, the former CEO, former board members and their chairman, architects, quantity surveyors and Chinese contractors.


With the criminal proceedings, it is time to pull all the stops to make the project commercially viable. The government must rescue it from the auctioneer’s hammer.

Protracted investigations have been a major drag on the mall’s commercial viability. No tenant was going to sign up with a party that was permanently under investigation by anti-corruption authorities. Indeed, the Kisumu project has lost billions of shillings due to unending investigations.

Built at a cost of nearly Sh4 billion, making it the largest public investments in Kisumu in decades, this national asset has been sitting idle and haemorrhaging revenues since as far back as April 2016, when its completion certificates were issued.

According to an assessment on projected rental income conducted by property agent Tysons many months ago, the mall had the potential of fetching even Sh235 million in rental income per year.

Years ago, the property agent proceeded to seal deals with major occupants, including the anchor tenant and a major tyre maker. Mark you, the mall is one of the most expensive property development projects built in western Kenya in recent years.

We should be ashamed that such a valuable public asset has been wasting away despite its commercial viability. We can argue and debate whether the feasibility study was conducted at arm’s length and whether the project was procured transparently. Let’s debate its cost, compare prices with similar projects in the region and debate whether the variations on the scope and cost were done in accordance with public procurement laws.


But let us not leave it to waste way. This is an asset we can milk for returns and can be commercially viable if managed well.

Which leads me to the broader issues of policy which the predicament of the Kisumu mall project raises.

The government needs to make up its mind about the role it wants regional development authorities to play. The reason entities such as LBDA are going into commercial activity is because we allowed our development finance institutions to die.

I see development authorities stepping into the gap left by State-owned development authorities to venture into building assets which they can own for a period before flogging them off to third parties at a handsome profit.

When did the Kenya Tourist Development Corporation last build a hotel? Or the Industrial Development Bank partner with an investor in manufacturing? The mandate of the Kenya Industrial Estates was SME development. It is more or less moribund.

Were it the good old days, the Industrial Commercial Development Corporation would have been the ideal partner for the co-developer of the Kisumu mall. But then, it is crippled by lack of funding.