Ruto’s Sh350bn Japan deals to boost manufacturing, energy and transport sectors

Signing of the framework that will boost vehicle manufacturing, energy and trade

The government is set to intensify investments in the energy, transport and manufacturing sectors following President William Ruto’s visit to Japan, where he secured various agreements worth Sh350 billion. The signing of the agreements do not only foster bilateral ties but are expected to propel economic growth.

The bulk of the funds – Sh260 billion – will be injected into infrastructure projects such as the Dongo Kundu and the Mombasa Gateway Bridge at the Coast. These initiatives are expected to enhance connectivity and spur regional development. Additionally, Kenya and Toyota Tsusho Corporation of Japan sealed a significant framework agreement aimed at fostering collaboration in vehicle manufacturing and renewable energy development. Under this agreement, Toyota Tsusho Corporation will establish a vehicle manufacturing plant within Kenya’s borders.

The corporation has pledged an initial investment of Sh800 million in the Kenya Thika vehicle manufacturers. President Ruto, who witnessed the signing of the agreement in the presence of Toyota Tsusho Corporation of Japan President Ichiro Kashitani, emphasised the importance of achieving a balance between imported and locally manufactured vehicles. He stressed the need for affordable locally made vehicles to discourage the importation of used cars. Kenya’s vehicle assembly industry has seen an average production of 12,000 cars annually in recent years, falling short of meeting market demand.

Toyota’s investment is poised to enhance Kenya’s manufacturing capabilities, thus bridging this deficit and improving the quality of locally made vehicles. The partnership positions Kenya as a strategic market for the automobile industry, granting Toyota Tsusho Corporation a competitive edge in the African continent. Notably, other African countries hosting major Toyota manufacturing plants include Egypt, Ghana, and South Africa.

A substantial allocation of Sh15 billion will be allocated to the Olkaria Geothermal Development Project, underscoring the mutual commitment to sustainable energy solutions. Moreover, Japan pledged Sh1 billion towards enhancing medical oxygen production, a critical resource for healthcare facilities across Kenya.

These funds will come at a time when Kenya is rolling out the new Social Health Insurance Fund, meant to ensure universal healthcare for all.

Beyond financial commitments, both nations solidified their cooperation across various sectors through Memoranda of Understanding (MoUs), spanning ICT, healthcare, finance, and security. Notably, these agreements include provisions for bolstering the capacity of institutions like the Kenya Medical Research Institute (KEMRI) to effectively manage pandemics, with an investment of Sh3 billion.

In a strategic move towards enhancing defense capabilities, Kenya became the first African nation to formalise a Defense Cooperation agreement with Japan, strengthening the longstanding partnership between the two countries. Furthermore, Kenya secured an additional KSh30 billion from the Japan Bank for International Cooperation, designated for the acquisition of heavy machinery and mechanised assets, essential for advancing key infrastructure projects. President Ruto expressed gratitude for Japan’s unwavering support towards critical projects such as Phase II of the Mwea Irrigation Scheme and the National Rice Masterplan, underscoring the significance of international collaboration in achieving shared developmental objectives.

Overall, the financial commitments and collaborative agreements forged during President Ruto’s Japan visit mark a significant stride towards advancing Kenya’s economic agenda and fostering enduring partnerships on the global stage.

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