Resources & Climate
Commentary

Proceed with Caution: The Lamu Port Development

in Program

By Adam Giansiracusa – The Kenyan government has been moving ahead with a $16 billion dollar plan to build a major deep-water port north of Lamu, a tropical island and UNESCO World Heritage site near the Somali border. Dilapidated infrastructure remains one of the single greatest impediments to Kenyan, and East African, economic growth, handicapping the potential of many countries. Recognizing this deficiency, and with a will to take advantage of expected political changes in the region, the project aims to provide a greater number of opportunities for employment in Kenya’s north, and tie Kenya to Ethiopia and South Sudan together through trade.

The port, Kenya’s second deepwater facility after Mombasa, would be the main conduit for sea-borne trade for not only southern Sudan, but Ethiopia as well, giving it a market of 90 million people. There are two major parts of this plan. First is that Ethiopia is projected to grow at roughly 7% per year through 2015, and this will, it is hoped, create a growing market for tradable goods. With the Gibe III Dam set to become operational soon as well, Ethiopia’s electrical capacity, and hence capacity to industrialize, should increase dramatically. Second is the expected secession of South Sudan in 2011. With the SPLM’s position strengthened in the south following generally fair elections, many are expecting secession. Kenya has been lending aid to, and sending many of its most experienced civil servants to South Sudan to help develop the nascent nation’s government in a bid to develop ties between the two. In this sense, the Lamu port project must be seen in a wider regional context – the benefits that it will bring to Kenya are in large measure because of a rapid, ongoing transformation of several other key countries in the region.

Kenyan ministers have grandiose plans: they envision South Sudan exporting its oil through a new pipeline to the port, new highways connecting the region to Addis Ababa and Nairobi, three international airports and “tourism cities” along a new rail and highway network, and an oil refinery at the port to process the oil. The Kenyan national budget in 2009 was under $9 billion total, far below the total project cost, while the current largest ongoing project on the continent is a $4 billion financial and residential district in Khartoum. Once completed, the port should have a capacity twice that of Mombasa, currently the largest port in East Africa. Serious discussions of the plan have been ongoing since 2006, with repeated delays. A feasibility study should however be completed by the summer of 2011, and work will commence from that point. 

The size of the plans for the new project and Kenya’s long history of corruption mean that skepticism about the project is warranted. Since 2006, various groups from the Arabian Gulf states and East Asia have been interested in funding the project. As it currently stands, a Chinese group of investors will be the main financial backers, with the potential for Japanese involvement as well. Corruption and tensions in the leadership between Raila Odinga and Mwai Kibaki, the Prime Minister and President respectively, however continue to handicap the government and its decision making capabilities. 

The ideal situation presented for the project however is problematic. The two factors that would help Kenya build a market for such a development in East Africa are not guaranteed to occur. The Gibe III Dam in Ethiopia has seen numerous problems during construction and Ethiopia continues to remain unstable. Meanwhile, while South Sudan is expected to secede, this is not guaranteed. As much of the country’s oil is in the South, any secession could also be very violent, and trigger a new civil war. In case the ideal situation does not pan out, Kenyan planners will have to rethink elements of the project, however that does not necessarily doom it either. Mombasa is currently at its maximum capacity, and as such, the Lamu port could also be used for expanding trade within Kenya, and to Uganda. 

Japan and China are working with Kenya to plan and finance the project, and it should move ahead soon. Land speculation on plots that would be used for the port has skyrocketed, with the price of some plots increasing a hundred-fold in only a few years. This progress has prompted concern in Lamu however about the damage it could do to the local economy. Fishing and tourism, which increased dramatically due to the UNESCO designation, are the lifelines of the local economy and increased pollution could harm both. Considering the failure to properly manage Lake Victoria, which continues to face difficulties due to overfishing, pollution, and a water hyacinth invasion, many feel the Kenyan government will be unable to protect Lamu. 

Lamu and Kenya as a whole need the economic development that a project of this scale could bring. There is a market for trade through the port, and such development could help bring stability to the wider region. At the same time, there are justifiable local concerns over environmental degradation and issues of corruption. One of the biggest problems many major infrastructure projects in Africa face is the lack of proper planning that goes into them, and transparency on the scope, implementation, and progress of the project would help alleviate some of these issues. The project will be the largest ever undertaken by Kenya, and it remains to be seen how it will end up.

Photo Credit: Magnus Kjaergaard, The seafront of Lamu town in Lamu Island, Kenya. 2007 http://en.wikipedia.org/wiki/File:Lamu_town_on_Lamu_Island_in_Kenya.JPG

 


 

Adam Giansiracusa is an intern in the Regional Voices program at the Stimson Center.

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