Kenya and Ethiopia Thursday signed an agreement for the construction of a standard gauge railway line from Lamu Port to Addis Ababa as the two countries engage in major infrastructure development to boost trade.
Ethiopia Prime Minister Meles Zenawi and President Kibaki witnessed the signing of the agreement by Transport minister Amos Kimunya and his visiting counterpart Deriba K Heiy at State House, Nairobi.
Mr Zenawi arrived in the country early Thursday and is expected to be joined by South Sudan President Salva Kiir during the commissioning of the multi-billion shilling Lamu Port by President Kibaki Friday.
Lamu Port is a joint project of the Governments of Kenya, Ethiopia and South Sudan.
The port of Lamu is strategic both politically and economically for the East African region, and presents the most appropriate entry to East and Central Africa compared with Port Alexandria in Egypt, Cape Town in South Africa or Lagos in Nigeria.
The road from the port through Garsen to Isiolo is also expected to the constructed to be at par with the Nairobi-Mombasa highway and will enable Ethiopia import goods using Mombasa port at a cheaper rate than through Djibouti.
The Lamu Port-Southern Sudan Ethiopia Transport Corridor as one of the flagship projects identified to enable Kenya become a middle-income industrialised country by 2030.
In a joint communique read by Foreign Affairs minister Moses Wetangula, President Kibaki and Mr Zenawi expressed confidence that Lamu Port-South Sudan-Ethiopia (LAPSSET) project will, once realised, unlock trade and investment opportunities between the two countries.
“They welcomed the completion of negotiations on the bilateral agreement for the development, operations and management of a standard gauge railway network between Lamu Port and Addis Ababa,” the communique read.
Mr Zenawi, who is on a two-day state visit to Kenya, and President Kibaki pledged to work together under Common Market for Eastern and Southern Africa to facilitate efficient movement of goods and services between the two countries.
They noted that although the volume of trade between Kenya and Ethiopia has registered a steady growth over the years, there remains a huge unexploited potential.
“They also underscored the need to commence work towards a special status agreement to increase the volume of trade and investments in both countries,” the communique said.
The two leaders also discussed political affairs, social affairs, security, information and communication, water and irrigation and cooperative development and directed their countries agencies to implement the decisions made for the benefit of the citizens.
During his visit, Mr Zenawi also expected to hold talks with Kenya Private Sector Alliance.
Kepsa chief executive Carole Kariuki said the “consultative meetings will provide a platform for high level interactions, develop an agreed outline of areas that require intervention by both governments and possibly come up with time bound action plans for resolving existing trade barriers including mitigating trade balance between the two countries".
With more than 80 million people, Ethiopia is the most populous landlocked nation in the world and has the biggest economy by GDP in East Africa and Central Africa.
Kenya is Ethiopia’s second biggest trading partner in Africa after Djibouti.
Trade between Kenya and Ethiopia is further expected to rise in the coming year following the signing of a $743 million deal for the construction of the Addis.
Kenya has been looking north to diversify its trade relations, focusing on Ethiopia and Sudan.
The road project, covering over 880 kilometres and financed through a loan from the African Development Bank, is expected to be completed in three years.
Kenya’s Economic Survey 2010 showed Nairobi’s exports to Addis Ababa stood at $43.1 million while Kenya imported goods worth $2.4 million.
Also present at the State House meeting were: Prime Minister Raila Odinga, Vice-President Kalonzo Musyoka, Civil Service boss Francis Kimemia and Cabinet ministers Najib Balala, James Orengo and Chirau Ali Mwakwere.