Kenya and Tanzania have always seen each other as competitors when it comes to megaprojects that have a regional reach. The competition has risen from years ago with each duplicating its partner’s efforts and laying out schemes to win other members of the East African region and beyond.
However, if there is any project that has been the hallmark of this competition, then it is the development of sea ports, with Kenya investing heavily in both Lamu and Mombasa ports while Tanzania is boosting its Dar es Salaam port and planning on growing both Bagamoyo and Tanga ports. Each country has an eye on the larger eastern African region as local commerce cannot sustain the projects.
Ports are gateways for 80% of global merchandise trade by volume and 70% by value. This is a point both the East African countries have taken keenly pushing on with the development of ports and hinterland networks, pipelines, and support facilities that make it easy to move goods and services across the region that has the highest growth rate in Africa.
The countries have over the years realized that the ports with their present capacity cannot sustain a regional demand for cargo and have often over–utilized them. A study conducted by PricewaterhouseCoopers’ titled, ‘Strengthening Africa’s gateways to trade’, shows that Dar es Salaam and Mombasa port volumes exceed their actual throughput capacities.
Mombasa Port’s far-reaching influence
Mombasa Port is one of the continent’s largest with a maximum capacity of 2.5 million TEUs a year having a lower capacity and business only to ports in Morocco, Egypt, South Africa and Nigeria.
Over the years, Kenya has increased investment in the port and other support infrastructure to ensure its competitive edge compared to the region. The dream has been big, though the results have trickled. Mombasa port supports business and commerce in Mombasa, along the Mombasa-Uganda highway, and supports business up to Rwanda, South Sudan, Uganda and Western DR Congo in what is regionally called the northern corridor. It also has a growing presence in Nairobi and Naivasha with established Inland Container Depots (ICD).
To the contrary, Dar es Salaam port is smaller but equally aggressive. It has an installed capacity to handle 450,000 TEUs annually but currently handles 750,000 TEUs annually. This port has always sought to rival Mombasa promising an easier and smoother clearing of cargo as well as a reliable transit corridor on the Southern Corridor to Burundi, Zambia, Rwanda and DR Congo.
Strengthening the foundations
With these established ports, the two neighbor states have been racing to increase their capacity to handle cargo. For example, Kenya has invested heavily on building a new 32-berth port in the heritage town of Lamu. The port once complete in a decade will handle 20 million TEUs annually becoming one of the biggest and probably busiest in Africa. The first berth of the Ksh32 billion ($320 million) Lamu Port is complete, awaiting official opening.
The idea is to develop further network of economic activities that will transform the northern part of Kenya and help ease pressure on the existing network. Conceived under Kenya’s Vision 2030, the Lamu Port, South Sudan, Ethiopia Transport (Lapsset) comprises more than the port. It is made up of a rail network, highways and international airports in Lamu, Isiolo and Lodwar, an oil pipeline from South Sudan, Uganda and Ethiopia to Lamu Port, an oil refinery and three resort cities in Isiolo, Lamu and Turkana, in northern Kenya.
While the Mombasa port and its network is complete including two inland container depots in Nairobi and Naivasha, and an SGR line to Naivasha, the construction of Lamu Port is far from completed. There has been work on the Lamu-Isiolo highway but most of the other projects have been slow, with over ten years since its official launch.
Tanzania is undertaking a $345 million World Bank funded Dar es Salaam Maritime Gateway Project (DSMGP). The project will involve physical infrastructure improvements featuring deepening and strengthening of the Port’s berths; construction of a new multipurpose berth at Gerezani Creek; the deepening and widening of the entrance channel and turning basin; and the improvement of rail linkages and platform in the Port.
It also includes an institutional strengthening component which will support the restructuring of Tanzania Ports Authority (TPA) and further develop its capacity to act as landlord, manager, and developer of the ports in Tanzania and for future private sector participation in port operations.
Beyond the port, this is supported by a $7.6 billion SGR line that seeks to connect the port city to its hinterland. In early 2020, the country signed a facility agreement with Standard Chartered Bank for a $1.46 billion loan to finance the construction of the first and second phases of the project, covering a distance of approximately 550km from Dar es Salaam to Makutupora.
This line was seen as a direct threat to Kenya’s line which initially was meant to go to Rwanda but failed with the line only reaching halfway in Kenya. Rwanda is keen on linking with either Kenya or Tanzania and as these countries struggle with funding, Uganda and DR Congo observe keenly.
Tanzania is also keen on expanding Tanga port where it expects to connect to the 1,445km long oil pipeline transporting oil from the fields of Uganda, after an earlier plan to move it through Kenya failed. The $3.5 billion Tanga pipeline is also facing a funding challenge as Tullow Oil, the main oil explorer in Uganda, exits the region.
However, it is the Bagamoyo Port project that is the more ambitious one and not immune to controversies. There have been reports that President Magufuli cancelled the $10 billion Bagamoyo port deal with China Merchants Holding International (CMHI) with stringent conditions introduced. There have been back and forth talks between parties involved in this project since 2013 when the 20 million TEUs capacity port was initially mooted.
The Tanzanian Government approved the Bagamoyo Special Economic Zone Project, which is an integrated project that will include the development of a port and an adjoining industrial zone in Tanzania.
Until all the projects are complete and economic evaluations concluded, the two countries will continue racing towards achieving the ultimate port of the region.