THE NEW SHOPPING CENTRE IN WESTERN KENYA SET TO SPUR THE REGION’S SOCIAL-ECONOMIC GROWTH.
The Lake Basin Mall (LBM), the largest in Western Kenya, is expected to provide visitors with a fully-fledged shopping experience, add to the country’s GDP basket while boosting the region’s economy and ease the unemployment burden to the country, once it is fully operational.
According to the 2019 Economic Survey report highlighting Kenya’s economic performance for 2018, wholesale and retail trade accounted for 6.3% of the country’s GDP, ahead of the manufacturing sector and slightly behind the agriculture, forestry and fishing sector which accounted for 4.2% and 6.4% respectively of the 6.3% overall GDP growth recorded in 2018.
The shopping complex is owned by the Lake Basin Development Authority (LBDA), a government agency established in 1979 by an Act of Parliament to plan and coordinate the implementation of development projects in the Lake Victoria catchment area.
The entire project cost the taxpayer over 4.1 billion shillings ($41M).
The five-floor shopping complex has a floor area of approximately 60,000 square meters. It is located at Mambo Leo junction along the Kisumu-Kakamega road approximately 3.5 kilometers from the Kisumu CBD.
The complex comprises of a modern mall with all social amenities, a lower floor parking area for 330 cars and recreational areas. It has a three-star hotel, showrooms for vehicles and other household goods, a tire center for servicing vehicles and has an electric perimeter fence and 24-hour CCTV cameras for security monitoring. The National Police Service is also expected to post officers to the mall to enhance security.
The entire project covers an area of approximately 8 acres. Construction began in August 2013 and ended in 2016.
“A date has not been set yet for the official launch of the mall, but it has been open for the public since 2017. There are a few shops and offices that are already operational,” said Dr. Raymond Omollo, LBDA managing director.
Jobs in Western Kenya
Once it is fully operational, the shopping complex is projected to raise 220 Million Kenya shillings ($2.2 M) annually in rent besides generating revenue from other sources such as parking fees and advertising billboards.
“The mall is meant to encourage local investment, but foreign investors are also welcome. More than 500 jobs can be created, and this can ease unemployment and help grow the region’s economy and that’s why we built the mall,” said Dr. Omollo.
The government is struggling to cope with unemployment in the country. The Economic Survey report released by the Kenya Bureau of Statistics in 2019 revealed that the government created fewer jobs in 2018 compared to 2017 despite the country has recorded the highest GDP in years at 6.3 % in 2018 compared to 4.9% in 2017.
According to the survey, the government created a total of 897,000 jobs in 2017 against 840,600 jobs in 2018 -a drop by 56,400 jobs.
Sustainable Energy Use
The mall complex is fitted with solar panels that power the hot water system in the hotel and provide street and perimeter security lighting at the complex. The design also provides for skylights that ensure adequate natural light in the mall. It has a biodigester for recycling of water.
“One of our core mandates as the LBDA and provided in the Act (of parliament) that established the Authority is to pursue mitigation and adapt to climate change and ensure mainstreaming of cross-cutting issues in basin development,” said Dr. Omollo.
The LBDA’s compliance with green energy requirements is also informed by the Climate Change Act 2016, a regulatory framework providing for mechanisms to reduce Kenya’s carbon footprint. Under the Act, assented into law by President Uhuru Kenyatta in May 2016, all public and private entities must integrate climate change responses into their development planning.
Tenancy agreements are still in progress with the retail space going for between 40 Kenya shillings ($0.4) and 80 Kenya shillings ($0.8) per square foot depending on the size and its location.
“As of now, the LBM is narrowing down to one (anchor tenant). We are in negotiations with a few interested international and regional retailers. As of today, (June 2019) 65% of the mall has already been booked and paid for,” said Dr. Omollo.
It has been alleged that the mall’s budget overshot by over 1.6 billion Kenya shillings prompting the Ethics and Anti-corruption Commission (EACC)-the anti-graft agency, to in November 2018, question nine former and current members of the LBDA management over the issue.
“The investigation is on-going, and it would be prejudicial to discuss it. The project was cleared as value for money by a team from the State Department of Public Works. The project’s final count was 4,138,895,104.89 (close to $41.4M),” said Dr. Omollo.
Underfunding and Debt
The LBDA which depends on government funding faced financial constraints that delayed completion of the project. According to the Auditor General’s report on the financial statements of the LBDA for the year ended 30th June 2017, the Authority secured a 1.5 Kenya shillings ($15M) loan to clear debts owed to the contractor of the mall.
In it’s 2017/2018 financial year, the Authority allocated one billion Kenya shillings ($10M) towards the partial clearance of a bank loan.
The Authority also recorded a 47% drop in its total income by the end of June 2017 after the government slashed its budget.
Dr. Omollo said a delay in paying the contractor led to the accrued interest which in turn increased the final cost of constructing the mall complex.
Establishing the complex is part of the Authority’s long-term strategy to engage in income-generating projects that will enable it to generate its own revenue and supplement its budget.
For now, efforts to get the mall fully up and running are on-going. Dr. Omollo said the delay in completing the Kisumu-Kakamega road which is right next to the mall had stopped some would-be tenants at the mall from starting operations right away.
“We are in a strategic location. The Kisumu-Kakamega road that is being constructed will give access to the mall. We have engaged a property manager who oversees both letting and management. We encourage business owners and the public to visit the mall and talk to him for spaces available,” said Dr. Omollo.