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      • China joins contest to fund second port in Lamu

China joins contest to fund second port in Lamu

Kenya has inched closer to building the multi-billion shilling Lamu port after China said it was willing to finance the project that Japan is also eying, heightening the battle between the two Asian giants for control of Africa’s economic landscape.

 

This follows bilateral talks between President Kibaki and his Chinese counterpart Hu Jintao last week in which China agreed to give Kenya a Sh1.2 billion grant—the bulk of which will go to setting up a second port at Lamu and a rail and road corridor from the Coast to Isiolo.

 

With Japan also said to have interest in the project, it remains to be seen how the bidding for the project between the Asian rivals plays out.

 

Both countries have interests in Southern Sudan where they have been granted rights to explore oil and China has struck a deal to put swathes of land in the region under food crop production, in what has come to be commonly known as Africa’s land grab, prompting the need for an efficient and strategic infrastructural link between the two and African countries.

 

A statement from the Kenya and China leaders said the port—which is estimated to cost Sh1.2 trillion—will take top priority in their infrastructure financing deals.

 

“It was agreed that appropriate modalities on financing arrangements be made to avoid any financial gaps due to the huge financial resources that will be required, ” said the statement. “The port had the potential to open up vast parts of Northern Kenya and benefit regional economies of Southern Sudan and Ethiopia.”

 

This comes amid revelations that a Japanese company—Japan Port Consultants—has been awarded a tender to carry out a feasibility study on the proposed port which experts hope will position Kenya as a major transhipment hub.

 

Enhance dominance

“This is likely to be the most fought after project between the two countries as they seek to enhance their economic and political dominance, ” said Dr Joseph Kieyah, a senior researcher at Kenya Institute of Public Policy Research and Analysis (KIPPRA).

“In any case, Kenya has all gain.”

 

The award of the contract to the firm, analysts said is an indicator of Japan’s renewed push to make strategic inroads into Kenya—a shift that has seen the scales tilt to its favour—putting it in direct competition with China which has for years been a more brazen hunter of opportunities in the country’s vast infrastructure and natural resources sectors.

 

Japan has for decades defined its presence in Kenya through aid, but is now widening its scope to the private sector, with its firms increasingly making few but high strategic entries into East Africa, targeting the expected windfall in mineral extraction and consumer goods markets— a move that places it in a head-to-head battle with China.

 

Last month, Toyota Tsusho, the carmaker’s trading arm, announced plans to build a $1.5 billion (Sh112 billion) oil pipeline from South Sudan to the Kenyan coast, complete with an oil export terminal.

 

“There is some kind of soft competition emerging between China and Japan, not just in Kenya, but across Africa,” said Gerishon Ikiara, a lecturer at University of Nairobi’s Institute of International Relations.

 

Maritime experts say that the future of transshipment business in Kenya lies in the construction of a second port in Lamu, which due to its deep waters will give it capacity to accommodate post Panamax vessels currently preferred by the shipping lines.

 

Transshipment business for the East African countries is already threatened by South Africa, which has seven ports.

 

A new port- Ngqura was opened last year and has positioned the country as a transshipment hub for East and West Africa.

 

The Lamu port is expected to have a total of 22 berths with a quay that will lie on 1,000 acres.

It will serve the Ethiopian market, currently served by Djibouti port and Southern Sudan which relies on Port Sudan.

 

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