New Lamu Port will enhance Kenya’s position as a regional economic hub

Tuesday March 6 2012



I confess that I was initially sceptical about the success of the Lamu Port corridor project. First, there was the controversy about the amount of money we were about to commit to paying consultants for feasibility studies.

Critics argued that it was not right to pay so much money for the studies.

Indeed, the initial agreement signed between the Ministry of Transport and the contractors — Japanese Port Consultants of Tokyo — was for a massive Sh3 billion.

This provoked an explosive dispute between the Treasury and the Ministry of Transport that was only resolved when the consultants were prevailed upon to accept a 35 per cent cut in the original contract price.

The second reason I was sceptical about the grandly designed Lamu Port corridor were the shenanigans around the location of the port.

Even as arguments were still going on about the cost of the feasibility studies, well-connected individuals were busy plotting schemes and calculating to grab the land around the port location so that they would be in a position to flip it later to the government once the project was rolled out.

All of a sudden, the land had been registered in the names of influential individuals. Work on the project nearly stalled when the new landowners popped up to demand compensation from the government.

I understand that during a meeting of the inter-ministerial committee overseeing the project, it emerged that one of the new title owners had even charged one of the parcels to a commercial bank for a loan of Sh380 million.

I also understand that when the matter came up before the full Cabinet for discussion, some influential voices argued that the land grabbers should be compensated.

The speculators seem to have allies in high places.

In a remarkable show of political will for the project, the Cabinet ruled, by a large majority, that none of the land grabbers would be paid. Consequently, Lands Minister James Orengo was directed to cancel all the titles.

The Cabinet’s action cleared the way for last week’s ground-breaking ceremony that was presided over by three Heads of State — presidents Kibaki and Salva Kiir of Southern Sudan and Prime Minister Meles Zenawi of Ethiopia.

What lessons have we learnt? The first is that grand public-funded infrastructure projects of the proportions of the Lamu corridor project will always pose high risk of corruption.

That is why anti-corruption watchdogs such as Transparency International advise that such projects be subjected to thorough corruption risk assessment before they are rolled out.

As the two examples given above amply demonstrate, rent-seeking elites are always looking for opportunities to make money from every stage of the implementation of such projects.

Where is the money for the myriad Lamu corridor projects to come from? The thinking is that most of the projects will be funded through partnerships with the private sector.

Indeed, until the Southern Sudanese came to town with the offer of building their own pipeline through North Eastern Province to Lamu, the government had reduced the scope to constructing a mere three berths — bulk cargo, general cargo, and a container terminal.

In the wake of the current tensions between Juba and Khartoum over sea routes, we should strive not only to boost our geostrategic significance as the hub of economic activity in the region, but also to achieve our dream of acquiring a second transport and economic corridor.

Currently, we have only the Northern Corridor, which starts from the Port of Mombasa and stretches to Malaba on the border with Uganda and onwards to Central Africa.

A second corridor is critical because we need to access Ethiopia and Southern Sudan from the new port of Lamu. It will ease the pressure on the crowded Northern corridor.

I see Lamu quickly emerging as the region’s largest oil exporting port, handling cargo from Uganda and Southern Sudan.