Kenya Hopes to Spur Investment as LAPSSET Project Unfolds

Kenya Hopes to Spur Investment as LAPSSET Project Unfolds

The $29 billion Lamu Port and New Transport Corridor to Southern Sudan & Ethiopia (LAPSSET) project – Kenya’s biggest ever socio-economic venture since independence – is now taking shape and is expected to greatly increase international business opportunities.

The head of corporate affairs at the Kenya Ports Authority, Bernard Osero, told AFKInsider that Lamu port will have 32 berths, with a dredged entrance channel of 18 meters to enable it to accommodate ships of up to 100,000 tons.

“The cost for the short-term plan for Lamu Port Project, including the first three berths, is estimated to be $664 million,” he said.

The country’s industrialization and investment sectors are among those expected to receive a great boost as the project unfolds. It will, in addition, open up remote areas and encourage regional trade with South Sudan and Ethiopia.

The development was planned to be completed by 2016/17, Osero said. This plan, he added, is however dependent on availability of funds. The administration block and other supportive facilities are now nearing completion.

“The role of KPA is to provide technical advice on procurement and tendering while the government provides funds,” Osero said.

KPA is mandated by law to manage all scheduled ports along Kenya’s coastline, but has only one principal port so far — Mombasa.

LAPSSET was launched in March 2012 with the signing of a Memorandum of Understanding for the proposed railway and pipeline between Kenya, South Sudan and Ethiopia. Japan Port Consultants, collaborating with BAC/GKA Joint Venture, had won the tender to conduct a feasibility study on the project’s infrastructural development. Its report proposed construction of new ports on the Kenyan coast, in particular Lamu and Manda Bay.

A master plan for design, development and the tendering documents were then presented to the government. A railway line and highways from Lamu to Juba, construction of an oil refinery at Lamu and an oil pipeline to South Sudan and Ethiopia were also envisaged.

The Corridor is expected to serve Ethiopia’s 85 million-strong population, as well as the 25 million residents of South Sudan.

The success of LAPPSET will also integrate the remote northern, eastern and north-eastern parts of Kenya with the rest of the country’s economy. The project presents a range of business opportunities for local and foreign investors. The main areas being targeted are tourism, agriculture and manufacturing.

“The whole road network in northern Kenya is a nightmare. The situation is made worse by a high level of insecurity due to regular bandit attacks. If LAPSSET will improve the road network, that will solve most of our problems caused by bad roads and lack of basic infrastructure,” said Abdi Mohamed, owner of a fleet of trucks which regularly transport goods to South Sudan.

According to a report prepared by the project coordination secretariat, available investment opportunities will be found through the Free Trade Zones (FTZs) to be established.

These investment opportunities include shipbuilding and repair, and crude oil export facilities. More opportunities will be found in the establishment of oil transport/terminal facilities.

Joseph Wahito, a senior lecturer of taxation and cost accounting at Star College of Management in Nairobi, said that due to the magnitude of this project, the government should embark on streamlining and refreshing laws governing investment to favor investors interested in LAPSSET.

Special Economic Zones (SEZs) and Export Processing Zones (EPZs) — which offer great incentives including tax holidays and investment discounts for both local and foreign investors — are among the special features of the project.

“The government must outline friendly and competitive incentives to make investors find reason to cast their nets in the project,” Wahito said. “This is a very ambitious project. Industries, highways and all aspects of this project will offer a lot of job opportunities to ease unemployment.