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September 26, 2018

Tanzania's pipeline deal a wake up call for Kenya

The news that Uganda has decided to abandon the Uganda-Kenya pipeline in favour of a Tanzania route generated quite a bit of pessimistic commentary. Now Rwanda wants to build its railway through Tanzania instead, too. Has Kenya lost the East African plot?

I don’t necessarily think the Tanzania route is a good idea: Pipelines are massive investments, and it makes little sense to me to build two of those rather than one shared facility. And Kenya’s railway story is complicated already: Before the SGR, there was the old railway line that was being rehabilitated by investors, and the SGR’s single-sourcing and value for money is rather suspect.

But it’s an interesting development to suddenly see Tanzania become a lot more invested, quite literally, in the East Africa Community: before, I often had the impression that it was dragged along, held back by its suspicion of Kenya’s and its perceived grasping dominance, and by its general deeply entrenched suspicion of business, foreigners, and foreign business.

But there are other reasons that make me feel less pessimistic about Kenya’s role in the EAC, too: For one, since Kenya has now decided to go ahead with its own pipeline (not as if it had much choice), we can see who will make faster progress with moving from exploration to production: Uganda certainly hasn’t been a pacesetter in that respect, having discovered oil years before Kenya, and then having squandered all that headway thanks to corruption and Museveni’s insistence on a local refinery. If Kenya is able to keep up the pace, it might yet come out ahead of its neighbours.

Also bear in mind that Kenya is still the most diversified economy. Certainly not without its challenges, but I don’t see Tanzania and Uganda overtaking Kenya anytime soon. Rwanda desperately needs a railway to lower transport costs, but small and landlocked, it will be even less of a competitor to Kenya.

Having some competition in regional leadership may not a bad thing: this can prompt some rethinking, and give Kenya more incentives to focus. Aside from the fact that I don’t consider two pipelines a sensible investment, I think the latest developments could shake Kenya out of what might have been a bit of regional complacency and laziness in the status quo. This could be productive – unless, of course, the country completely overlooks that opportunity. And given that we’re heading towards an election, that’s a distinct possibility.

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