Approved by:

Race is on for East Africa’s coastal links

East Africa’s Kenya and Tanzania are racing to build the region’s biggest ports and capture transport from the interior. Chinese finance and construction firms are closely involved in both projects, aiming to transform Kenya’s Lamu Port and Tanzania’s Bagamoyo Port into giants that will dwarf other ports in Africa and provide centres for new industrial zones and transport corridors to the interior of fast-growing East Africa.

The interior countries that would be affected by these significant African public-private partnership (Africa PPP) transport infrastructure projects include Burundi, eastern Democratic Republic of Congo, Ethiopia, Rwanda, South Sudan, Uganda and Zambia.

Tanzania lays its heart on Bagamoyo

Bagamoyo is 75km north of the main Dar es Salaam (DSM) harbour. The plan is to build it to handle 20m containers a year, compared to 800,000 at DSM currently, although there are plans to double that. Hong Kong private company Hutchison Wampoa is closely linked to the Tanzania International Container Terminal Services company which operates Dar es Salaam port

The new port is likely to be built in stages but overall could cost $10bn. A construction agreement was signed for the port and associated zone in October 2014 with port developer China Merchant Holding International (CMHI) and Oman’s biggest sovereign wealth fund (SWF) called the State General Reserve Fund (SGRF). Initially a start date of 2015 was given, although this has been missed. The Government has set aside $20.7m to compensate the 2,000 households who lose their land and homes.

Bagamoyo used to be the most important trading station on the East African coast during the 19th century, including salt, ivory and slaves (the Swahili bwaga-moyo means “lay down your heart” although there is debate as to whether it was more focused on tens of thousands of porters who carried heavy loads in from the Great Lakes, as the slave trade was more focused at Kilwa) and it was the original capital of German East Africa. It is being considered as a World Heritage site.

Because it is close to Dar es Salaam, it should be easy to link to existing infrastructure, including the aged railways built into the interior during the German colonial era and the Tazara line built in the 1970s on a different gauge by the Chinese to allow Zambia to export copper to the sea without relying on apartheid South Africa. A consortium of Chinese firms is putting together a $7.6bn project to upgrade the railway line to the interior on standard gauge.

In March 2013 Tanzania and China signed an $800m agreement for infrastructure developments projects when Chinese President Xi Jinping visited, with joint venture African PPP infrastructure projects a key target.

Kenya’s Lamu Port bid

Preliminary work has started in Kenya at the coastal end of the proposed Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) project, designed as the country’s second transport corridor. LAPSSET is to include a port, a standard gauge railway to Juba and Addis Ababa, road, an oil pipeline and refinery, three ports and three resort cities. In 2013 the cost of the PPP project was estimated at $29bn, including $3bn for the 32-berth port and $7bn for the railway.

Kenya Ports Authority will be in control, but development will be by the China Communications Construction Company. KPA also owns and manages most of Mombasa Port.

Early works include a police station and harbour office and airport improvements. However, main financing for the Lamu corridor is not finalized and it is not certain whether it will go ahead, given hot competition from Tanzania and Ethiopian alternatives. 

It takes two to Tanga

In April 2016, Tanzania’s spirits soared when Uganda announced at an East African Community (EAC) summit that it would route its oil exports, set to start in 2020, via a 1,400km pipeline form Kabaale through Tanzania’s Tanga port, 200km north of Dar es Salaam and close to the Kenyan border. It said this would be the most cost-effective and oil company Total says it has secured the $4bn needed to fund the pipeline.

The alternative LAPSSET pipeline could be vulnerable to attack from Somali-based terrorists and costs were higher and the terrain more rugged. Kenya said it would push ahead with a pipeline from Lamu to Lokichar in its oil-rich Turkana region. Oil reserves in Uganda are estimated at 1.8bn-2.2bn barrels, and Kenya has recoverable oil reserves of up to 750m barrels.