Japan to give Kenya about $860 million in loans, grants for bridge, economic zone

NAIROBI (Reuters) - Japan will give Kenya nearly $860 million in concessional loans and grants for the construction of a bridge in the port city of Mombasa and other infrastructure projects to support an economic zone there, Kenyan and Japanese officials said on Friday.

Katsutoshi Komori, Japan’s ambassador to Kenya, told a news conference that a loan of about $450 million will go toward building a 1.3 km bridge linking Mombasa’s mainland to an island in the city.

“It is expected that the Mombasa Gate Bridge will reduce the economic losses caused by traffic congestion and allow Mombasa to achieve its full economic potential,” he said.

Another $350 million loan and a $57 million grant will go toward developing a port, road, electricity and water supply and drainage in the special economic zone known as Dongo Kundu in Mombasa.

Japan is looking to boost its investment in Africa, much as its rival China has been doing for years. At a conference in Tokyo last month attended by a few dozen African leaders, Prime Minister Shinzo Abe said Japan would expand its private-sector investment in Africa, which came to $20 billion over the past three years.

The port city of Mombasa is a gateway to east and central Africa. It processes imports and exports for Kenya and several other countries including Uganda, Rwanda, Democratic Republic of Congo, South Sudan and Burundi.

Ferries between the mainland and island in the city carry about 300,000 people a day, and they are usually congested with both human and vehicle traffic.

“The completion of the bridge over the channel will significantly decongest the city of Mombasa by providing an alternative to the Likoni Ferry, allow free movement of marine vessels that need to access Kilindini Harbour,” said Kenya’s Finance Minister Ukur Yatani.

Once the economic zone is complete - work is expected to begin in 2021 and take four years - it will have the capacity to employ 27,000 people in various businesses, especially in manufacturing, the government has said.

Friday’s agreements comes days after President Uhuru Kenyatta canceled a dam project - Kimwarer - whose 22.2 billion shilling cost was found to be overpriced and which was also financially unviable.

He allowed a second - Arror- to be built for a maximum 15.4 billion shillings, down from a previously overpriced 28.3 billion shillings.

Henry Rotich, the previous finance minister, was removed from his post in July after he and other senior officials were charged with corruption here over the misuse of funds for building two dams. He has denied the charges and was freed on bail.

Yatani ruled out any possibility of the costs of the bridge and economic zone being inflated.

“I want to assure you, we have moved from the era where inflation of costs, delays in implementation. I want to assure you that will be a thing of the past,” he said.

Reporting by George Obulutsa; Editing by Bernadette Baum