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Kenya; plans for new port under threat

by / Comments Off / 178 View / 27th July 2014

July 25th 2014 – Kenya’s ambitious plans to become the entry point for the East African market with the construction of a new port facility are under threat following a growing number of attacks  close to the site which have left 100 dead in the past six weeks, says global security risk consultancy Edinburgh International.

The government earmarked the coastal territory of Lamu as the intended entry point for a new regional trade route, known as the Lamu Port – Southern Sudan-Ethiopia Transport (LAPSSET), whose success is dependent on the construction of a new port facility, costing between US $16 and US$26 billion.

The port will create a conduit for the export of oil from South Sudan, Uganda and Kenya’s own fields, and support the work of companies such as Total, China’s CNOOC and Tullow Oil, who are operating in these areas. But in recent months, threats to international projects in Lamu County have risen dramatically, adding to political and environmental concerns surrounding the development of the regional mega-port, and raising questions about East Africa’s long-term economic viability.

The outlook for the project is not good. Security challenges will persist and increase unless local grievances, particularly relating to evictions, are addressed sustainably, said Tim Jones, Edinburgh International’s risk and commercial advisory manager. Although the immediate threat to international personnel is limited at this stage in the project, it’s almost certain we’re going to see costs go up and investor confidence decline.

The immediate impact of Kenya’s security deterioration on key sectors of its economy, such as tourism, is well documented (the World Bank has already revised its 2014 forecast of Kenya from 5.8 percent to 4.7 percent).  But the long term effects of further delays in infrastructure development, as a result of security or environmental concerns, could be far more serious, not only for Kenya’s growth prospects, and economic position as the  entry point for the East African market, but for the wider region.

Tanzania, Kenya’s neighbouring port competitor, is not positioned to capitalise on the delays in Lamu, so continued violence there has the potential to impact economies across the whole East Africa region, Edinburgh International says.

 

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