Iranian President Mahmoud Ahmadinejad turned his tour of the country into a window of business opportunity.

As he flew out, the Iranian leader’s imprint on the country’s struggling economy left no doubts about the Middle East nation’s determination to raise its trade and investment portfolios, which hitherto were dominated by the West. In general, Tehran made a commitment to inject more than Sh110 billion into the economy, which is going through a rough patch following the tightening of purse strings by Western multilateral and bilateral lenders. Kenya has fallen afoul of the West, which through the World Bank and the IMF has been critical of Nairobi’s fiscal policies and runaway graft.More significantly, the Government is desperate to bridge a financing gap in the 2008/2009 Budget as the Central Bank statistics for six months ended on December 31 show has ballooned to beyond the projected Sh130 billion. The statistics, however, did not factor in the debilitating food shortages. The financial scandals in the energy sector amounting to Sh7.6 billion could further punch holes in the current financial year’s Sh670 billion budget.Until recently, Japan and India were the only Asian countries with high investments in the country. But after President Kibaki came to power in 2002, trade between Kenya and the East has grown phenomenally, raising concerns in the West that its once blue-eyed boy is giving its traditional development partners a wide berth.As demonstration of shifting bilateral and commercial relations, CBK says in its latest statistics on foreign trade: "Bilaterally, imports of goods to Kenya during the year in review were mainly from the United Arab Emirates (16.2 per cent), India (11.5 per cent), China (7.8 per cent), Japan (6.1 per cent), South Africa (5.9 per cent), United States of America (3.8 per cent), United Kingdom (3.6 per cent), Germany (3.4 per cent), Saudi Arabia (3.2 per cent), Indonesia (3.2 per cent) and France (2.0 per cent)."

From the data, it is evident that the Middle East, in addition to Libya, has made significant incursions into the country.

Lure of oil

During his visit, President Ahmadinejad said Tehran was determined to economic forays into the Common Market for East and Southern African, a free trading bloc of nearly 400 million people. As testament of its seriousness, Tehran, which is eyeing the oil, transport, agriculture, telecommunications and manufacturing sectors, says it would roll out an economic partnership strategy and raise bilateral trade to $500 million (Sh40 billion) from the current $55 million (Sh4.4 billion).Last week, Iran laid out more than Sh110 billion for investment in oil, transport, health ad educational sectors as Nairobi turns external sources to close a budgetary financing gap estimated to have ballooned to more than Sh40 billion, thanks to post-election violence that precipitated cutbacks in the ministerial budgets and grand corruption in the Government. Budget performance, CBK says: "The central Government budgetary operations for the period July — November 2008 of the fiscal year 2008/09 resulted in an increase in the budget deficit by Sh2.8 billion from Sh23.6 billion (1.3 per cent of GDP) on commitment basis in a similar period of fiscal year 2007/08 to Sh26.4 billion (1.2 per cent of GDP). Similarly, the budget deficit on cash basis increased from Sh30.7 billion or 1.7 per cent of GDP to Sh 37.6 billion (1.7 per cent) during the period."When Kenya struck a Sh484 billion financing deal with Qatar to construct a second seaport in Lamu, Planning and Vision 2030 Minister Wycliffe Oparanya, provided a peek into why Nairobi’s dalliance with the Middle East.  "We want to start immediately. Unlike Western nations and multilateral lenders, Qatar would finance the project without conditionality," Oparanya explained, while denying claims of Kenya’s unrestricted appetite for easy loans and grants.  The minister further said: "It is not a matter of free money off course. If we went to the World Bank, it would take four years to negotiate. Kenyans cannot wait for long for this project to start."Health and transport In exchange for the Lamu Port project, Kenya has entered a 99-year lease agreement with Doha to lease 40,000 hectares in the River Tana Delta to produce food and fruits for the Middle East desert nation.Last week, Finance Minister Uhuru Kenyatta signed a multibillion-dollar deal with Kuwait for the construction of a roads network and water development in the far-flung districts of northern Kenya, which have not been opened up to modern transport and communication. The scramble for Kenya by the Arab League nations grabbed headlines further after Libyan government-backed firms were involved in controversial acquisition of the Grand Regency Hotel (now Laico Regency Hotel) for Sh2.4 billion.The acquisition came hot on the heels of Libyan oil firm, Tamoil, taking over the Mobil Kenya for $200 million (Sh16 billion) and changed its name to Oilibya. The deal was clinched on the understanding that the North African government would sell oil to Kenya at subsidised rates. At present, Libya is reportedly negotiating to wrest the Bomas of Kenya cultural centre from Government ownership. The deal is separate from the Libyan investment in the Kenya Petroleum Oil Refineries, co-owned by the two governments on a 50-50 per cent basis. Libya is upgrading the refinery at the cost of $450 million.