17 April 2017

East Africa: Infotech Sues EAC for Failure to Pay Dues

Photo: The East African
Stockbrokers on the Nairobi Securities Exchange. Kenya in 2015 pulled out of a project linking capital markets in the region in protest against awarding of the contract to Infotech.

The East African Community (EAC) is engaged in a legal battle with a company that is implementing a controversial project to link stockmarkets in the region.

A report from the recent Council of Ministers meeting reveals that the firm, Infotech, is pursuing legal action against the regional bloc for failure to pay part of the contract dues.

The two parties tried to resolve the dispute through adjudication but the tech firm is unsatisfied with the outcome that favoured the EAC and is now seeking arbitration.

"The EAC has had several conference calls with the vendor and written to them requesting that they do not proceed with the arbitration," reads the report in part.

The total value of the contract between the EAC and Infotech is Ksh247.7 million ($2.4 million).

Infotech demands payment of Ksh80 million ($777,649.20) for partially completed work.

In a World Bank funded project, Pakistan's Infotech was in 2015 awarded a contract to provide and install software that would connect the clearing and settlement systems of stock markets in the EAC.

Kenya in 2015 pulled out of the project in protest against the awarding of the contract to Infotech.

The country demanded cancellation of the contract saying that Infotech's software was not compatible with the Nairobi Securities Exchange.

The report from the Council of Ministers indicates that there had been futile attempts to bring Kenya back on board.

Uganda is also now asking for more time to consult before going forward with the project.

Linking up the infrastructure of the capital markets in Kenya, Uganda, Tanzania and Rwanda is supposed to make it easier and faster for investors to trade across the region.

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