Nairobi News

Parliament has queried the Sh6 billion planned purchase by the Ministry of Foreign Affairs of a building to house its ambassador in Switzerland.

The ministry said it had identified the property in the posh resort city of Lake Geneva in Switzerland, which would be paid for in phases.

“The total negotiated cost of the project is Sh6 billion, which is to be funded in phases starting with Sh4 billion in the first year 2017/18,” documents submitted to Parliament say.

The cost of servicing and maintaining the property in the long term is also expected to fall squarely on Kenyan taxpayers.

PRESSING NATIONAL ISSUES

The National Assembly’s Foreign Relations committee questioned the deal’s pricing, arguing that it was particularly ill advised coming at a time of pressing national issues.

Foreign Affairs secretary Amina Mohamed made the purchase plan public through documents submitted to the committee last week.

The Treasury has, however, allocated the impending transaction Sh1 billion in the year starting July, leaving a Sh3 billion shortfall.

The ministry said on Monday that the decision to buy the property instead of renting was informed by the need to cut the cost of renting buildings in the diplomatic hub that hosts Europe’s UN headquarters and the United Nations Conference on Trade and Development (UNCTAD).

Kenya’s diplomatic mission in Geneva has for the past 40 years rented space, costing taxpayers Sh4 billion, according to officials.

“Currently, the ministry is paying Sh140 million per year in rent, which is prohibitive,” the ministry said in response to queries on the matter.

EXPENSIVE CITY

Economist Intelligence Unit last year ranked Geneva as the fourth most expensive city in the world, partly based on higher cost of rents.

Analysts said that while economic diplomacy, spearheaded through such property acquisitions, is key to entrenching Kenya’s global presence, the planned purchase cannot be said to be a priority.

“We are in a place where we need to embrace more “austerity” and Foreign Affairs might wish to consider the purchases in that context,” said Aly-Khan Satchu, chief executive of Nairobi-based financial advisory firm Rich Management.

Ministry officials, however, downplayed those concerns, insisting that Kenya stands to reap more benefits from having a permanent physical address in Geneva where former Trade minister Mukhisa Kituyi serves as UNCTAD secretary-general.

“We have done a cost-benefit analysis that informed this proposed purchase. Geneva is a strategic multilateral station where our operations are long-term,” said Margaret Gachuru, the  head of asset management in the ministry.

Ms Gachuru said multiple official development assistance (ODA) deals to Kenya running into billions of dollars are closed in Geneva and that had Kenya lacked representation in the European nation, Dr Kituyi would probably never have been elected to head UNCTAD.

IMAGE IN GLOBAL CIRCLES

The ministry reckons that Kenya, which is styling itself as a regional diplomatic hub, has an image to keep in global circles and this comes at a cost.

“Our chancery (the embassy’s office) and ambassador’s residence have to be in a diplomatic enclave to enjoy global diplomatic security and status,” said Dr Gachuru.

She cited Nairobi’s Gigiri diplomatic blue zone, which hosts dozens of foreign embassies, with the location being the only area with a diplomatic police unit.

Kwame Owino of the Institute of Economic Affairs on Monday said MPs should move with speed to query the procurement process and cash involved in the transactions.

“Every property purchase should be informed by an analysis of the diplomatic needs of the mission. But we must be cautious as well because we have precedents of property purchase as an avenue for collusion and unethical conduct,” he said.

Kenya in January also acquired a Sh2 billion office space in New York as part of a plan that will see taxpayers shoulder a Sh6.9 billion burden over the next three years to buy properties for the country’s diplomats and embassies in different world capitals.

TOKYO EMBASSY SCANDAL

The renewed purchase and expansion of properties in Kenya’s missions abroad is likely to ignite memories of the Tokyo embassy purchase scandal in which taxpayers are alleged to have lost Sh1.1 billion.

The ministry has more recently indicated a change of plan from lease of space and rent to property purchase as rental costs shoot into billions of shillings annually.

Rent expenses by Kenyan foreign missions now account for a fifth of the ministry’s recurrent budget of Sh17.9 billion or Sh3.58 billion.

Kenya has 49 embassies and high commissions abroad alongside 27 consulates – a subdivision of the embassy that protects interests of Kenyans in foreign lands.