Kenya's new 'Lunatic Express' to remake town as region's trade hub
5/8/2013 10:00:19 AM

But today, Kenya’s capital and its 3 million inhabitants are the driving force behind East Africa’s racing economy.

The reason? The 19th-century railway that — despite being nicknamed the “Lunatic Express” because it seemed like a mad dream — made Nairobi the thriving modern city it is today.

Now, the Kenyan government is aiming to mimic that success with an equally ambitious project that might be the country’s biggest infrastructure scheme in over 100 years.

Authorities are planning a $25 billion venture that will link one of Kenya’s seaside towns to neighboring South Sudan and Ethiopia by building thousands of miles of roads, railway, and oil pipeline through the country’s vast and neglected north.

The project, which will be implemented over a period of 17 years, promises to remake the sleepy, ancient Swahili town of Lamu into a hub for transport, trade and oil refining for the whole East African market.

With 140 million people, the East Africa region’s economy is growing at close to 6 percent annually, according to the World Bank. All three countries are set to benefit from stronger trade ties.

The project will be “transformative and game-changing infrastructure for the entire African continent,” said Silvester Kasuku, chief executive at the LAPSSET (Lamu Port-South Sudan-Ethiopia) Development Authority, the agency responsible for implementing the plan. “We are talking employment creation, investment, growing the economy. It is going to help us to tap resources, introduce high-value new investments, new technologies and new ways of doing things.”

According to planning documents, the proposed corridor will begin with a 32-dock, deep-water port at Lamu, on which work has already begun. The four-story port headquarters is nearing completion: dirt roads have been cut through the bush, boreholes dug and water pipes laid. A high-voltage power line is also being connected to the construction site.

From there, 930 miles of railroad and 1,000 miles of highway will branch the north to South Sudan and Ethiopia.

An additional 780 miles of oil pipeline will carry crude oil from South Sudan to a new refinery to be built at Lamu as part of the project. The installation will refine 120,000 barrels per day, dispatching the final product in another 610 miles of pipeline to Ethiopia, where petroleum imports are flagging. Landlocked Ethiopia relies entirely on imports to meet its fuel needs.

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The potential to tap into unexploited resources in South Sudan and northern Kenya will likely bring in investment for the project, says Mugo Kibati, director-general of Vision 2030, a national plan aimed at turning Kenya into a middle-income country. The LAPSSET project is a key component of that plan.

“I don’t think an investment of $24 billion over 15 years should be a concern,” Kibati said.

But the funding is in fact far from secure.

Kenyan officials have so far signed a relatively small $484 million deal with the ChinaCommunications Construction Company to build the first three docks at the new port.

The same officials say discussions are underway with China, the African Development Bank and others, including private sector companies, about financing and building different parts of the grand plan.

“Most projects face problems because of a lack of leadership support, policy support and financial support,” Kasuku said. “This project has all those elements.”

But while Kenyan officials fundraise, the country’s crumbling infrastructure remains a dampener on regional growth as most goods and products entering or leaving East Africa do so along a single-lane, regularly potholed highway that leads to a single port at Mombasa.

Mombasa port is both gateway and bottleneck: it is overstretched, inefficient, slow and expensive.

The World Bank calculates that it costs less to ship a container from Tokyo to Mombasa than it does to transport it on from Mombasa to the Ugandan capital, Kampala.

Mombasa handled 22 million tons of cargo in 2012 and, when completed, Lamu port is expected to handle a further 24 million tons, more than doubling Kenya’s import-export capacity and funneling goods onto a new road and railway system.

The existing British colonial railway barely functions, and needs replacing. The single-lane highway from Mombasa to Nairobi and on to Uganda, Rwanda and beyond is dangerous and jammed with trucks inching inland.

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“The Mombasa railway line is what constituted the beginning of Kenya as we know it,” Kibati said of the country’s flagship “Lunatic Express.” “But for the last 100 years, we haven’t had much development beyond a radius around that railway line.”

Intra-African trade, economists say, has great potential but is rarely tapped to the full. A report from the Brookings Africa Growth Initiative, a policy research group, last year noted that while intra-regional trade in the five-nation East Africa Community (the EAC currently comprises Kenya, Tanzania, Uganda, Rwanda and Burundi) is growing, it remains low.

But now, Kenya and its neighbors intend to push ahead in the name of economic growth.

“We must invest in this infrastructure if we want to progress,” Kasuku said.