EDITORIAL: Sense of proportion needed in EA infrastructure push

Saturday October 26 2019

The on going construction of second berth of Lamu port in this picture taken on August 27.

The on going construction of second berth of Lamu port in this picture taken on August 27, 2019. PHOTO | LABAN WALLOGA | NMG 

The EastAfrican
By The EastAfrican
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In a couple of weeks, Kenya will open the first phase of its multi–billion dollar Lamu Port, the beachhead to the Lamu Port South Sudan Ethiopia Transport (Lapsset) Corridor.

That will be the second new logistics corridor after the Djibouti-Ethiopia standard gauge rail that went into service a few years ago.

Yet to be done, Djibouti is also in the middle of a mega project to expand its port while to the south, Tanzania which has in recent years completed upgrades to the Dar es Salaam port, is now betting on a new port at Bagamoyo.

Invariably, all these projects target the Eastern Africa hinterland with all contenders aiming to be the logistics hub of the region.

Looking at East Africa’s or even Africa’s logistics map, it is not in dispute that the region and continent suffers a huge infrastructure deficit. But must the projects be this grandiose?

There is indeed a case for developing infrastructure but a sense of proportion and degree of co-ordination are needed to make these projects viable.

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Multiple corridors provide critical redundancy in the event of failure, if they are inter-linked. But their economic efficiency needs to be looked at in more practical than academic terms because the economies are racking up huge debt to build these projects.

For instance, the Lapsset Corridor aims to link Lamu, South Sudan and Ethiopia along a logistics umbilical cord comprising rail, an oil pipeline, electric power and roads.

At the same time, if at all the Kenya standard gauge railway eventually makes its way to Malaba, Uganda is also planning to extend a limb to its border with South Sudan.

From there, an 80-kilometre link would take te SGR line to Juba. It is in doubt that South Sudan will in the medium term have the economic velocity to support two SGR links. As a result, it has become a question of who between Kenya and Uganda gets to Juba first.

Does it need to be this way? Probably not, because a shorter inland SGR leg would probably be better for South Sudan at this point in time since it commits less capital.

Kenya also plans to build an oil refinery at Lamu just as Kampala wants one at its Hoima oil hub in western Uganda. A single refinery jointly-owned by Uganda, South Sudan and Kenya would probably make more economic sense but this was put paid when the Uganda crude oil export pipeline went south to Tanzania.

Given the congestion around Dar es Salaam, a new port and industrial complex in Bagamoyo might be necessary. What is distorting the rational view of these projects is that they are being approached from the spirit of competition rather than complementarity. This exposes the region to expensive infrastructure that it may never afford or sustain.

All the countries in the region from Djibouti to Tanzania are already saddled with worrying current account deficits thanks to a recent surge in debt-financed infrastructure projects. The downside is that export revenues are not keeping pace, leading the borrowers into a sure debt trap.

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