The future of almost 10 billion Kenyan shillings ($73 million) worth of Japanese Overseas Development Assistance (ODA) projects in Kenya is in jeopardy due to double taxation problems, according to a statement released by the Kenyan President's office. The statement acknowledged the issue and assured that Kenya is working towards resolving it, but did not provide a timeline. The Kenyan Treasury website shows that the Kenya-Japan double taxation agreement is currently “under negotiation.”
During a bilateral meeting with the Prime Minister of Japan, Kishida Fumio, in Nairobi on Wednesday, Kenyan President William Ruto stated, “We are pursuing the expeditious resolution of this matter within the due process of relevant institutions.” The statement noted that Japan has invested in infrastructure and geothermal projects in Kenya and is funding the High-Tech lab at KEMRI, the Mombasa Intelligent Transport system, and the Ahero Irrigation Scheme.
According to a report published by the International Monetary Fund (IMF), Kenya has around 10,000 MW of untapped geothermal energy, spread across two dozen sites in its Rift Valley region, enough to power the country's current peak demand five times. Japan's investments in geothermal energy projects in Kenya have the potential to significantly contribute to the country's economic development and energy security.
Double taxation can have severe implications for international development projects, making them less attractive to investors and threatening the progress made in various sectors. It is crucial that Kenya and Japan resolve the double taxation issue promptly to ensure the continued success of their partnership and the implementation of ODA projects in the country.
As Kenyan President William Ruto emphasized during the bilateral meeting with the Japanese Prime Minister, “We need to ensure that the investments and trade between our two countries grow and expand. There is a lot of potential, and we need to continue working together to realize it.”
