Kenya’s grand Horn of Africa project
White elephant or port in the making?
With Uhuru Kenyatta’s contested victory in the March elections, Kenya’s new
leaders have inherited a grandiose project for a transport corridor linking
South Sudan and Ethiopia to a planned deep-water port at Lamu. But will it
ever see the light of day?
by Tristan Coloma
<
http://mondediplo.com/2013/04/> April 2013
Mwai Kibaki, who was president of Kenya until last month, wanted to create a
Greater Horn of Africa, a single economic bloc — extending the East African
Community (Burundi, Kenya, Rwanda, Tanzania and Uganda) to include Somalia,
Ethiopia and Djibouti. To do this, he resurrected a mega-project from the
1970s: the construction of a multimodal transnational transport hub. The
Lamu Port-South Sudan-Ethiopia Transport Corridor (Lapsset Corridor) will
hinge on a deepwater port on Manda Bay, in the Lamu Archipelago, off Kenya’s
northeast coast, and will form the first section of a land bridge from Kenya
to Cameroon, joining the Indian Ocean to the Atlantic (see The Lapsset
vision). The aim is to transform Africa’s economy through international
maritime trade and the integration and opening up of East Africa.
That’s the plan. But it may not be going so well, according to Ahmet, one of
the security guards who watch the many kilometres of fence around the
construction site. “It isn’t going very fast, is it?” he said to me.
“Everything here goes at a donkey’s pace. They are building the officers’
block, but I can’t see anything that looks like a port costing billions of
dollars. I really don’t know what we’re supposed to be guarding. The port is
due to open in 2016, but the track hasn’t even been tarmacked yet. It’s hard
to believe it will be ready on time.” Yet the Kenyan government and its
South Sudanese and Ethiopian partners are confident that Africa’s biggest
building project in the post-independence era will be a success.
Lamu Port is the key to Vision 2030, Kenya’s medium-term transport plan
launched in 2008. Can it be completed by 2030? It will certainly be a great
leap forward for the Lamu archipelago. The old town of Lamu, with its
magnificent architecture and narrow streets, is a Unesco World Heritage
site. There are the usual modern contrasts, of course — it’s not uncommon to
see a Masai checking his email at the Internet café — but Kenya’s government
wants to propel this forgotten corner of the country into the future.
According to Mugo Kibati, director general of the plan’s Delivery
Secretariat, Vision 2030 aims at “a quantum leap in the standard of living
of the people of Kenya by the year 2030”.
Trade between eastern and central Africa today is dependent on the great
Kenyan port of Mombasa, which The World Bank regards as the region’s most
important asset. Mombasa is a barometer of East Africa’s economic vitality:
between 2007 and 2011, traffic increased by 23% and in 2011 the port handled
770,000 TEU (twenty-foot container equivalent units) of freight, though it
was built for only 250,000. But a recent US International Trade Commission
report ( <
http://mondediplo.com/2013/04/11kenya#nb1> 1) found that, on
average, a container takes more than two weeks to transit Mombasa, from
unloading to despatch.
Africans have time
A local saying goes “Westerners have watches, Africans have time”, but the
consequences of delays are obvious. Roads and railways are in poor repair,
and transport prices in East Africa are among the highest in the world (
<
http://mondediplo.com/2013/04/11kenya#nb2> 2). Cyrus Njiru, Kenya’s
permanent secretary for transport, says: “91% of Kenya’s GDP is now
generated within a 100km radius of the railway[s]. ... Outside the corridor
lies a geographical territory that constitutes over 75% of Kenya’s landmass.
It contributes less than 10% to national GDP. Why? Because the transport
infrastructure has never been modernised” (
<
http://mondediplo.com/2013/04/11kenya#nb3> 3).
Bringing transport costs under control and speeding up distribution would
help agriculture and industry to grow. Mark Bohlund, a senior economist for
IHS Global Insight, said: “These infrastructure projects are colossal. Their
cost will be equivalent to two-thirds of Kenya’s GDP, but they have the
potential to stimulate growth across the region. They could also have
crucial geostrategic benefits for peace and integration in East Africa.”
Three hours’ walk over the dunes from the tourist resort of Shela with its
white sand beach lies the village of Matondoni, surrounded by marshes. Its
extreme poverty contrasts with the mythical prosperity of the sultanate era
sold to the tourists. People in Matondoni have no illusions. Mohammed Famau,
the village’s mzee (wise man), said: “They tell us Lamu will be like heaven.
Everyone will have work, we will all live in comfort and this will be the
most developed part of Kenya. We’d like to have a modern lifestyle. A
supermarket would be a good start.”
Lamu merchants once sailed their dhows as far as India and China to trade
ambergris, ivory and slaves. Today, the area’s shady mangroves are home to a
few diehard fishermen, struggling with frail, ancient boats. If dredging the
channel and uprooting the mangroves don’t deprive them of their livelihood,
building the port and refinery will: the fish will disappear. They already
know they won’t get work in the port, because a government official came to
tell them they would need a school diploma to get a job. “But the school
here only opened four years ago,” said Moussa Omar, a shipwright. “If
everyone was going to get work, we’d be supporting this project. But it’s
going to bring us nothing but trouble. There won’t be any fish to catch. How
will we make a living? We won’t get any compensation from the government
because we have no education, so they don’t need to pay any attention to
us.” Kenya’s planning ministry, in charge of Vision 2030, admits that
fishing is the main source of income for more than 70% of Lamu’s 100,000
inhabitants.
Silvester Kasuku, infrastructure secretary in the prime minister’s office,
on an official visit to the construction site on Manda Island, said: “We are
confident that the port will open in 2016. I am on my way to meet the
stakeholders to report on progress with the construction work and the
development of the project. We meet regularly. Everybody supports the
project: the local people want the development — they want roads, a port,
airports. We can’t ignore their wishes.” After just a few minutes, he and
his retinue left in their 4x4s.
Save Lamu
His view is not that of the locals, who have formed an association called
Save Lamu, to demand the right to take part in decisions concerning the
Lapsset Corridor. “In principle, people are not against the port; they
support the project. Our main concern has been the lack of consultation,”
said Hussein Send Elmaawy of Save Lamu. “It’s a way of getting people to
feel that the project concerns them and take ownership of it. Nobody is
thinking of the negative impact on the environment, society, land use, jobs.
The local people need to be party to the draft agreement with the
government. There’s no point in talking if nothing is set down on paper.”
Since the government has paid no attention to its demands, Save Lamu has
resorted to legal action in an attempt to stop the construction of the port,
claiming that it is unconstitutional. It accuses the government of breaching
its duty of consultation and failing to carry out environmental impact
assessments. Chairman Abubakar al-Amudi said: “Communities must be informed
and consulted, as guaranteed by the constitution. The population will
increase sharply, and, as other communities move into the area, our own
culture will disappear.” Many local people believe the central government,
controlled by the Kikuyu ethnic majority, regards them as second-class
citizens. They react to perceived injustice with xenophobia: it’s not
unusual to hear people say that Lamu is becoming a Kikuyu colony. Tensions
between communities are growing, as is the desire for independence in the
coastal regions, which some political movements are encouraging.
For the first time, central government is showing interest in the region’s
economic development. According to Hervé Maupeu, a political analyst at the
University of Pau and Pays de l’Adour specialising in Kenya, this is “a
great novelty, because the growth triggered by Vision 2030 will come in the
peripheral regions. It is totally contrary to the normal practice in Kenya
since independence.” Since 1965 the government has always chosen to focus
its spending on areas with “high potential” (
<
http://mondediplo.com/2013/04/11kenya#nb4> 4), at altitudes of over 1,700
metres. This has led to the political exclusion and economic marginalisation
of communities in the dry regions, in the north of the country and in rural
areas.
François Gipouloux of France’s Centre for the Study of Modern and
Contemporary China believes this is a necessary change: “Coastal regions are
once again becoming the focus of liberalised economic space, in the shape of
transnational economic cooperation zones that depend on the creation of
international development — or in fact trade — corridors” (
<
http://mondediplo.com/2013/04/11kenya#nb5> 5). Development in eastern
Africa is no exception to the globalisation that is opening up markets,
thanks to special economic zones where investment, finance and operating
costs are significantly reduced to attract foreign investors. Kenya’s law on
special economic zones came into effect in November 2012.
‘Yes, we can’
Before appealing to private investors, the government itself financed the
launch of the first phase of the construction of the port, investing $306m.
Kenya, Ethiopia and South Sudan signed an agreement in 2012, under which
South Sudan will finance part of the oil pipeline and Ethiopia will
participate in the construction of the rail link. “Yes, we can!” said
Kasuku, possibly hoping that using Barack Obama’s slogan would silence
critics. “Why should the need to borrow funds to pay for the Lapsset
Corridor make us fear a debt crisis? (
<
http://mondediplo.com/2013/04/11kenya#nb6> 6) Half the country has no
infrastructure. We must invest, and this will bring money in. The project
will not be financed entirely through public debt, since we are also
appealing to the private sector.”
Wary of incurring too much public debt, Kenya chose to issue nearly $155m of
five-year bonds ( <
http://mondediplo.com/2013/04/11kenya#nb7> 7), offering a
generous return. The hope is that the Greater Horn of Africa will become a
horn of plenty. The returns on investment of which financial authorities in
the region boast are intended to attract “development” investors with a huge
appetite for speculation. Yet in 2011, Africa attracted only 3.6% of global
foreign direct investment (FDI).
“The Lapsset Corridor is the biggest opportunity in the whole of Africa,”
Kasuku said. “People should open their eyes and invest. We will be using a
mixture of public- and private-sector financing.” The port and the roads
will be financed by the public sector; the pipeline and refinery by the
private sector, the railway by the public and private sectors together.
To attract FDI, Kenya has also been using the IMF’s formula of
public-private partnership (PPP) (
<
http://mondediplo.com/2013/04/11kenya#nb8> 8), where the state supervises
private-sector investors in the creation of infrastructure and provision of
public services ( <
http://mondediplo.com/2013/04/11kenya#nb9> 9), despite
the incompatibility of the private sector’s quest for profit and the state’s
aim to redistribute wealth. For private sector investors, the attraction
lies in the fact that the state assumes all the entrepreneurial risks. “If
the private sector is to invest,” I was told, “the state must be able to
honour its promises. The explosion of debt means the state cannot offer such
guarantees. PPPs are not the right choice.”
Given the scale of the project, the Kenyan government has been trying every
means to diversify sources of funding, with a focus on attracting new FDI.
Kasuku was late for our interview: he had been obliged to attend a long
meeting in place of the prime minister, who, he let slip, was busy receiving
the Chinese ambassador, there to discuss the Corridor.
Kenya’s economic diplomacy is focused on the search for new partners such as
the BRICS (Brazil, Russia, India, China and South Africa), and South Korea,
Qatar and Singapore. China, India, Japan, South Africa and South Korea have
been the largest sources of FDI over the last five years, overtaking the UK,
France, Germany and the Netherlands (
<
http://mondediplo.com/2013/04/11kenya#nb10> 10).
The biggest contracts will all go east
The 2008 economic crisis marked the end of an era; the emergence of Asia,
less affected by the recent upheavals, is the beginning of another.
Developed economies attach conditions to their loans, demanding
institutional reform, an approach that puts them at a disadvantage compared
to China, which does not necessarily bid for projects, but seeks to secure
work for its enterprises through commercial contracts. “Kenya’s elites are
currently inclined to reject the West’s attempts to influence their country,
and even more of the World Bank and the IMF,” said Maupeu. “They want to
assert their autonomy, especially through their relations with Asia, which
is inventing new values, new visions and new ways of working together.”
In 2005 Kibaki, well aware of this mood, launched his Look East Policy. In
the first half of 2012, according to the Kenya Investment Authority, China,
South Africa, India and South Korea invested nearly $41m in Kenya. China
alone supplied $30m. A State House communiqué explained that President
Kibaki’s foreign policy was now guided by “changing geopolitical dynamics”.
The biggest contracts will all go east.
“Kenya isn’t looking eastward in particular,” said Kasuku. “But if you make
a worldwide appeal, it’s always the East that is quickest to respond. While
the others are still complaining, they turn up and are happy.” Yet the deal
seems unequal. China has encouraged dependence on its low-cost loans to
finance infrastructure projects in African countries, but China’s economic
growth, like India’s, is slowing. In its latest report, the IMF warns that a
sharp slowdown in China’s economic growth could have a negative impact, both
because of the strong trade links with China established in recent years,
and also because of China’s major contribution to finance through FDI (
<
http://mondediplo.com/2013/04/11kenya#nb11> 11).
Kibaki was trying to persuade African countries to use less external
borrowing to finance their infrastructure projects. He preached regional
integration and insisted that regional markets could offer alternative
sources of funding. But the Lamu project remains mysterious. Investors have
been waiting for things to become clearer, and to see how the general
election turned out.
After two terms in office, Kibaki, unable to stand a third time, no doubt
wanted leave his mark on Kenya. The key aim of the Lapsset Corridor project
is to end differentiated and fragmented development. Kibaki wanted a new
form of Pan-Africanism based on the neoliberal orthodoxy of international
lenders, while remaining free from the IMF. This meant modifying China’s
policy of development by making it compete with other emerging economies.
Will the new president, Uhuru Kenyatta, pursue the same strategy? Nothing is
less certain.
The Lapsset vision
With 32 berths and an access channel naturally wide and 18 metres deep, Lamu
Port will accommodate many large ships — from supertankers to Post-Panamax
vessels. Once completed, it will handle 23m ton of goods a year. It will
also be linked to other infrastructure: a 2,250-km oil pipeline from South
Sudan to Lamu, with branches to Ethiopia, Uganda and the Democratic Republic
of the Congo; an oil refinery that will process 120,000 barrels a day; an
international standard gauge railway that will link Lamu to Douala,
Cameroon; 3,500km of high-speed roads that will connect Lamu to the capitals
of Ethiopia (Addis Ababa), South Sudan (Juba), and Kenya (Nairobi); and a
fibre optic network for communications. Lamu is also intended to attract
tourists, with international airports and beach resorts.
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Received on Mon Apr 01 2013 - 20:42:57 EDT
