Kenya: EAC isolation beckons

Regional partners are no longer sure that we can uphold our end in an economic bargain, so they are quietly abandoning us to our fate and teaming up with others interested in achieving economic goals than in merely talking about them


Peter Wanyonyi

There was a time when everything happening in the East African Community revolved around Kenya. This was when Kenya was the leading economic power in the region, Tanzania was mired in the leftover decline of its socialist past, and Uganda was tied up in war after civil war. The less said about Rwanda and Burundi over that period the better.

Kenya looked good because we didn’t have the all-out wars of Uganda and Rwanda-Burundi, and because our industrial base stood out in stark contrast to the centrally-planned poverty then prevalent in Tanzania. The legacy of this still obtains in the region: Tanzania’s GDP per capita is just $880 (Sh89,800), compared to Kenya’s $ 1,460 (Sh149,000). Uganda plods along at $620 (Sh63,200), having been overtaken by Rwanda in 2007 – which, considering where the country is coming from, is a respectable $705 (Sh71,900).

But beyond the bland numbers game, a quiet revolution is happening, one that promises a rough time for Kenya.

The first indication that something wasn’t quite right with Kenya’s regional plans came in May 2016, when Uganda chose to route its oil pipeline through Tanzania – a longer route – rather than go with the Kenya option. The Kabaale-Tanga pipeline will be 1,450km long, and is scheduled to be completed in June 2020. The story of how Kenya lost the pipeline deal has been told a few times, and boils down to two main issues: Kenyan officials wasted lots of time getting the deal signed, and Kenya turned out to be more expensive than Tanzania. The costs could easily have been resolved, but the time wasted as Kenyan officials shilly-shallied and dilly-dallied annoyed the Ugandans, who had an option that didn’t involve waiting on Kenya to make up its mind.

In January 2018, it emerged that Uganda was – and is – pulling out of the deal to build a Standard Gauge Railway (SGR) connecting to Kenya’s own SGR at Malaba. The SGR project was dreamt up under the Kibaki regime, and was to have been the main project of the Uhuru Kenyatta presidency. Bits of the line are complete and operational, but Kenya has been unable to raise financing to cover the Kisumu-Malaba leg of the railway line. This has caused impatience in Uganda, where President Museveni has already secured US$ 2.9 billion (Sh296 billion) for the Malaba-Kampala SGR line. This is deflating for Kenya, especially after Rwanda withdrew from the Kenya-Uganda-Rwanda SGR agreement and opted to go with Tanzania’s own upcoming SGR instead. For Rwanda, this made sense because they now have to deal with just one party – Tanzania – rather than two parties, as they would have had to if they went via Uganda and then Kenya.

This has left Kenya in a bit of a lurch: if Uganda proceeds to pull out of the SGR deal with Kenya – and this seems to be a foregone conclusion, with Museveni saying Uganda will use the money to revamp its existing metre-gauge line instead – that leaves Kenya’s SGR with very low volumes of cargo. This makes operating the line economically unviable, given that Rwanda has already opted out. If the line cannot break even, it cannot be operated: it then faces a fate similar to that of the existing metre-gauge Kenyan railway line, which now appears to have died a natural death, aided by corruption and neglect.

Even as this rather bad news was happening, it emerges that Kenya has been on the losing end in infrastructure and energy projects once again. A Swedish firm approached the government looking to secure permission to build a 600MW, Sh253 billion wind power plant in Malindi. Kenyan officials took their time granting approval, slowed things down, even asked the Swedes to not invest so much money – all, no doubt, to entice the Swedes to part with certain favours for the officials – and in the end the Swedes got frustrated and quit. They moved to Tanzania, where they were welcomed with open arms.   

Kenya is its own worst enemy. Our corrupt ways know no bounds, and our national economic institutions are completely rotten from the inside. The results used to be felt only at personal level, when we collapsed the odd parastatal or killed this or the other national strategic service. But this has changed; the rot in our society has metastasised and spread to literally every national institution.

The country is sick inside out, and investors can see that. Regional partners are no longer sure that we can uphold our end in an economic bargain, so they are quietly abandoning us to our fate and teaming up with other partners more interested in achieving economic goals than in merely talking about them. Kenya, the original economic superstar of East Africa, is getting poorer and more chaotic at just the time when others in the region – Ethiopia, Rwanda, Uganda and Tanzania – are getting their economic acts together. In the end, it might be that Kenya – devoid of natural resources, corrupt to the core, shunned by investors and beset by political bickering and ethnic strife – becomes the Sick Man of East Africa. What a shame that would be. ^

Author is an infosystems professional



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