UAE investor inks Sh104b deal to expand Galana Kulalu project

The Galana Kulalu Food Security Project is set to benefit from a Sh104 billion ($800 million) investment, following the entry of a new private entity from the United Arab Emirates (UAE).

The private firm, Al Dahra Group has entered into an agreement with the National Irrigation Authority (NIA) that will see acres under irrigation extend beyond 200,000.

Al Dahra Group is interested in 180,000 acres. Selu Ltd, another private party has eyes on 20,000. Currently, NIA has 10,000 acres under irrigation with plans to add another 10,000 in the medium term.

The entry of private entities into the Galana Kulala Food Security Project is in line with President William Ruto's development agenda of opening up the country to public-private partnership (PPP) due to the exchequer's stretched balance sheet. 

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President Ruto recently issued the PPP directive for the Galana Kulalu Food Security Project which will entail an additional 10,000 acres in the medium term. 

The PPP will also see the construction of the Galana Dam to support 350,000 acres for food production. 

Selu Ltd has been doing trials on the already developed 10,000 acres with plans to scale up once the paperwork is in order. 

"The project agreement drafting is currently ongoing. Once the agreement is finalised, it will be initialised, presented to the PPP committee for approval, then-Attorney General before it is signed and rolled out," says NIA on the update of the agreement. 

The latest agreement which involves Al Dahra Group was signed this month in the presence of President Ruto and Water, Sanitisation and Irrigation Cabinet Secretary (CS) Erick Mugaa.

"The ambitious project aims at catalysing private capital into the irrigation space for large commercial farming to enhance food security, reduction of food imports and increase exports as espoused in the Kenya government priorities in the Vision 2030, Medium Term Plan IV 2023-2027 and Bottom-Up Economic Transformation Agenda," read a statement from the CS Mugaa led ministry on the signing of the Memorandum of Understanding.

Al Dahra Group is known for cultivating and trading in agricultural products among them rice and flour. It also deals in animal feeds. Asia and the Middle East are its main markets.

Agriculture is Kenya's core economic activity contributing directly to the gross domestic product (GDP) as a sector and also indirectly through manufacturing which largely involves food processing. 

However, rain-dependent agriculture has always affected the sector and by extension the country's GDP. For example, extended drought periods led to a drop in agricultural growth of 0.3 and 1.9 per cent in 2021 and 2022 respectively. 

"The magnitude of (economic) growth was somewhat subdued by suppressed agricultural production, owing to adverse weather conditions during the year. The real GDP decelerated from a revised growth of 7.6 per cent in 2021 to 4.8 per cent in 2022," reads the 2023 Economic Survey Report by the Kenya Bureau of Statistics (KNBS). 

Expanding the Galana Kulalu Food Security Project will ensure food security and improve the country's GDP figures. 

Galana Kulalu, started in 2013 by the then Jubilee-led administration which President Ruto was a part of spans about 1.8 million acres. Previous administrations have been finding it from the exchequer. 

However, scaling has been a challenge due to the availability of funds and queries on spending raised by the Auditor General. When President Ruto took office, he emphasized PPPs as one of the ways of raising pressure on the exchequer.

NIA noted in a statement that the memorandum of understanding is driven by the Kenya-UAE Comprehensive Economic Partnership Agreement. "It will bring innovative agricultural practices and create vital irrigation infrastructure, boost agricultural production to enhance food security, improve livelihoods and contribute to the Bottom-Up Transformation Agenda," said the Authority.