What you need to know:
- Infrastructure development and exploitation of new natural resources are pushing the axis of the economy northwards. One of the big questions facing the country as it looks ahead to the next half century of independence is how politics and politicians will adjust to this new reality
Anniversaries make us reflect on our past. In this of all years, the temptation to look back on the highs and lows of nationhood is almost overwhelming.
Like most people approaching their senior years, independent Kenya is marking its 50th birthday by attempting to cling to its youth. A Kenyatta is back in State House and an Odinga faces an uncertain future of political isolation.
A system of devolved government is fighting for its life. The government is underpinned by an alliance of Kikuyu and Kalenjin. Even Moi seems to have broken his exile from public life. Most important of all, the economy is set for a period of sustained growth.
But reliving the Swinging 60s threatens to let the songs of the youth drown out the noise of real changes taking place.
A fundamental shift in the economic geography of the country is taking place. Since the modern state of Kenya was created by colonial rulers, the areas of political and economic importance have been closely aligned.
Dominated by highlands
The economy of the country has been dominated by the belt of highlands stretching west from Nairobi. Control of the well-watered, densely populated highlands (and hence Kenya’s economy) has been the subject of so much of the country’s political history.
With the colonial economy dominated by agriculture for more than half a century, white settlers fought first to annex the territory and then silence dissent. After independence, control of the land of the highlands and the funds raised by the export of its produce lay at the heart of the battles between individuals, parties and factions that we all know.
As far as they were never given much thought by the rulers, the less economically valuable, semi-arid and arid frontier was seen as a source of insecurity.
The best use for much of northern Kenya, colonial governors and post-colonial presidents alike thought, was as a buffer to protect the more economically and politically valuable heartland from the ripples of conflict afflicting neighbouring states.
Dissent was suppressed, often by the dreaded paramilitary General Service Unit (GSU) rather than the causes for dissent being given serious thought.
As a result, those in the north have often felt politically and economically marginalised. For many, they are not part of the nation. When they leave to make the long journey to Nairobi, northerners often speak of ‘going to Kenya’.
But now the periphery is set to become the core of Kenya’s economic future. Infrastructure development and exploitation of new natural resources are pushing the axis of the economy northwards.
One of the big questions facing the country as it looks ahead to the next half century of independence is how politics and politicians will adjust to this new reality.
North strikes it rich
Two main developments have transformed the economic and political significance of northern Kenya. The first was the inclusion of plans for a ‘Lamu corridor’ – a transport and infrastructure link connecting Kenya to South Sudan and Ethiopia – within Vision 2030.
It is hard to overstate the ambition of the project, now named the Lamu Port and Lamu-Southern Sudan-Ethiopia Transport Corridor (LAPSSET). If all parts of the plan come to fruition, then it will represent the single greatest development effort undertaken by a Kenyan government.
Key aspects of the project include:
Railway. The creation of a standard gauge railway to Juba in South Sudan, with a branch line to Ethiopia, at a cost of over $7 billion (Sh595 billion).
Pipeline. The construction of an oil pipeline linking Lamu with the oil fields of South Sudan.
Refinery. The building of a new oil refinery capable of processing 120,000 barrels per day, at an estimated cost of $2.8 billion (Sh138 billion).
Tourism. The emergence of three new resort cities in Lamu, Isiolo and Lake Turkana.
Port. The development of a 32 berth port in Manda Bay to relieve pressure on Mombasa’s docks.
Roads. A two-way highway to connect Lamu, Juba and Addis Ababa at an estimated cost of $1.4 billion. (Sh119 billion)
The whole project is estimated to cost more than $30 billion (Sh2.55 trillion) which will amount to 16 per cent of the central government’s budget. However, some components of the project are viable and more important than others.
Given the amount of resources currently being devolved to the counties, this would represent approximately one third of central government spending. Financing the project will therefore depend on the ability of the governments involved to secure external funding.
This is likely to be easier for the more commercially attractive parts of the project, such as the port development and the oil pipeline, than others, most notably the railway. But even if only the pipeline and the port come to fruition, this will radically transform the politics and economics of the north.
The pipeline will stretch across northern Kenya, snaking down from the South Sudanese border at the top left corner of the country down to the Kenyan coast. This will certainly bring jobs but also new sources of political discontent as communities will have no choice but to move off their land.
The new road network will be just as significant. Work has already begun on a series of road projects that are designed to connect Lamu to Juba and Addis Ababa via Isiolo, Garissa and Moyale. A second road will connect Isiolo to Nairobi.
As a result, it will become increasingly easy for northerners to ‘go to Kenya’, and for the government to deliver services to some of the farthest reaches of the state. But that delivery of services could easily be construed as an invasive attempt by the central government to interfere with everyday life.
The second major development is the discovery of oil in Turkana. On July 31, Tullow, the British oil company, announced that Etuko-1 well showed signs of commercially viable amounts of oil. At the same time, the company increased the yields it expects to be able to secure from two previously drilled wells in Turkana – Ngamia-1 and Twiga South-1 – from 3,000 to 5,000 barrels per day.
In a statement, Tullow said that the Kenya petroleum resources are expected to be in excess of 300 million barrels, exceeding the basic threshold for development. As a result, Tullow is likely to move toward oil extraction in a joint venture with Canada’s Africa Oil Corporation.
This does not mean that oil will be pouring out of the ground tomorrow. Initial production will start next year but it will take another three to four years to bring significant hydrocarbon reserves to the market.
More work required
There are more reasons to expect delays. Further exploratory work needs to be done. Infrastructure in the area must be improved, regulation finalised and the confusion surrounding mining licences addressed.
Mining Cabinet Secretary Najib Balala cancelled all mining licenses issued between January 14 and May 15. It does not bode well for the oil and gas sector. Kenya may not see high levels of oil extraction in this Parliament.
Regardless of when oil is produced in commercial quantities, the impact on Turkana will be evident soon. Roads and other infrastructure will need to be built. This will increase the strength of connections between what is often thought of as an isolated area and the rest of the country.
The preparations for oil production will also create jobs and new economic opportunities long before Turkana’s oil is sold to consumers. According to a Tullow spokesperson, 80 per cent of people who have been employed by the company in Kenya are from Turkana county.
According to recent reports, Tullow plans to initially transport oil by road before constructing a pipeline. A pipeline feasibility study on the possibility of transporting oil from Kenya and Uganda – where Tullow has another operation – to the Indian Ocean is planned.
Given the proximity to the LAPSSET corridor, there is also a possibility that Turkana will be connected to the planned pipeline as part of the project.
Finally, there is the small matter of the of oil revenues. It is currently unclear how much additional revenue Turkana oil will contribute to the national economy. But using a conservative estimates, the 300 million barrels so far confirmed are worth around $30 billion (Sh2.55 trillion) at today’s prices.
Even if a small proportion of this cash is allowed to flow back to the counties, it will transform the resources available for development. Turkana is already one of the top beneficiaries of the county allocations recommended by the Commission on Revenue Allocation (CRA).
It will receive Sh5.7 billion. With additional oil revenues, the region will jump from one with the lowest incomes to one of the highest in just a few years.
Resource boom or curse?
Despite all the headlines, the north’s resource boom could prove to be a curse. Although the north will become increasingly significant to Kenya’s political and economic future, economic transformation is unlikely to radically improve livelihoods of the majority.
As residents of the Niger Delta in Nigeria have found, oil exploration does not actually deliver the many jobs they crave for. Road and pipeline construction is labour intensive, but often done by existing companies and government contractors using workers from other parts of the country.
Moreover, these jobs are temporary – once the pipelines and roads have been constructed, there is no point of retaining the large workforce.
The oil industry requires specialist skills that few Turkana residents have. The opportunity for local employment will therefore be highest in the lowest paid jobs.
This is unlikely to be received well in the county. Community groups have already begun complaining that they are missing out on the economic benefits of the resources under their feet.
Commentators have been overtly optimistic about the potential for oil exploration to affect the local economy positively. Early this year, the government committed itself to local ownership and to ensuring that multinational companies utilise local firms.
As a result, private businesses hoping to tap into new openings in the oil industry recently met to identify ways of doing business with drilling firms.
This, however, may not benefit Kenyans as much as some have implied. On the one hand, the government appears to be backing off its commitment to local ownership and content, repealing legislation passed last year that required mining firms to have 35 per cent local shareholding.
On the other, many of the companies with the technical skills and capacity to engage with Tullow are partly owned and financed by foreigners.
Turkana county residents may also be disappointed by the amount of resources that will flow into their government. The Turkana county council recently demanded that exploration should be halted until residents are guaranteed that they will receive at least 25 per cent of the proceeds.
Given the amount of resources the government has recently transferred to county governments, it is unlikely to deviate from the 15 per cent figure already agreed with Tullow.
The windfall will still be dramatic, but may not live up to the hopes of many in Turkana. Moreover, the returns will not be enjoyed until production on a commercial scale begins.
This gap between expectations and reality could prove to be a serious problem. Oil is seen as a panacea to Turkana’s economic conundrum.
Turkana is the largest county in Kenya with an area of nearly 77,000 square kilometres. As per the 2009 census, the county’s population is 855,399. Residents are thinly spread out across the vast territory.
There are only 13 people per square kilometre, compared to the national average of 66. Because less than 15 per cent of Turkana is urbanised, it is very expensive for the government to provide basic services.
History of neglect
A history of neglect also means that there is more need for those basic services in Turkana than almost anywhere else in the country. A recent report found that nine out of 10 people in Turkana live below the poverty line.
This is reflected in poor healthcare facilities and infrastructure. Only 2.4 per cent of households have access to electricity and only 18 per cent of the residents can read and write, compared to the national average of 66 per cent.
This underdevelopment has long roots. In the 1960s, there were only two primary schools in Turkana and one secondary school!
A concerted and prolonged effort to reverse fortunes in the region is needed for regeneration cannot happen overnight. Indeed, things may get worse before they get better.
The Gibe 3 dam being constructed in Ethiopia is expected to cut off the River Omo, which provides 90 per cent of the water to Lake Turkana. When this happens, the Lake will begin to dry up.
This will have a great impact on the 20,000 people who rely on the lake for their livelihood. It will also be a significant loss to the local economy – the lake is thought to contribute about Sh300 million every year.
Many in Turkana are therefore likely to become poorer just as the oil begins to flow. In turn, this is likely to generate considerable resentment and to increase the intervention pressure on the oil companies and the government.
If popular dissatisfaction begins to rise, we are likely to see the emergence of new sources of tension, which could have the potential to exacerbate instability.
Community leaders are likely to demand that Tullow provides more jobs and opportunities for the people of Turkana than is stipulated in its agreement with the government in Nairobi.
In the face of strong pressure from below, the county government is likely to demand a greater share of oil revenues so that it is better placed to assuage frustration of voters.
But the central government also needs the money and will be reluctant to surrender too great a share of oil revenues to the county administration.
Furthermore, as competition over oil revenues intensifies, tensions between different local communities over who has the right to the land, and hence the greater claim to the region’s new-found wealth.
This has been the case in the Niger Delta, where oil extraction has gone hand in hand with a rise in ethnic tensions and political instability.
In the worst case scenario, these tensions could add fuel to the existing conflicts. Climate change, population movements and political incitement have added to the many causes of violent clashes between communities in Turkana.
An escalation of that existing violence is more likely in Turkana than other parts of Kenya because of the arms and ammunition in circulation. According to the Small Arms Survey, there were 2,500 AK47, 540 G3, 232 Mosin Nagant rifles and over 4,000 cartridges of ammunition in circulation in 2008. Unfortunately, this is likely to be a gross underestimate.
The future of the north
The political challenges posed by these economic changes are many and significant. Not everything will change, however. The highlands will retain much political significance by virtue of their large population.
But while national politicians will not need to adjust their campaign strategies because of the economic changes taking place, once in office they will need to adjust the way they think about the north and how to conduct business there.
Although insignificant to national politics by virtue of their small number of scattered votes, residents of Turkana, Marsabit, Wajir and Mandera are now of great importance to Kenya’s future.
Already sceptical, with good reason, of central government’s motives and with access to small arms, the potential for existing social banditry to acquire a political mileage is obvious. So too are the myriad ways in which hydrocarbon production and infrastructure development could be disrupted by disgruntled populations or leaders.
For instance, any pipeline will be vulnerable to what is known as oil bunkering, the dangerous but profitable siphoning of oil from pipelines and sale on the black market. Such a practice is the single biggest cause of disruption to oil production in Nigeria.
The best strategy has to be to prevent such developments taking hold rather than attempting to counter them in five or ten years’ time. In other words, a new approach to governance in the north has to be created.
To date, maintenance of the north as a buffer zone required little creative thinking. As long as a semblance of order was preserved, the government could afford a smile. And if order was disturbed, the GSU were quickly deployed to re-establish it.
But trust and cooperation rather than force and coercion are needed if such challenges to stability in northern Kenya are not to overwhelm future governments.
Serious thought has to be given now to creation of a sense of mutual dependence and trust between the Kenyan state and its northern citizens.
For instance, consideration of the interests of the north have to be given due credit during awarding of exploration and production contracts, the tendering process for LAPSSET and formulation of laws governing these developments. Transparency during these negotiations and oversight by elected leaders are essential if anything meaningful is to be achieved.
Elected leaders from the region, therefore, need to work together across party lines and the increasingly fractious boundaries dividing the different parts of government.
The development of the north has significant implications for Kenya’s diplomacy too. As Charles Onyango-Obbo frequently reminds us in his columns in The East African, the focus of East African integration is, like Kenya’s economy, shifting northwards. Shared security concerns and grand infrastructure projects are tying together the countries of East and North East Africa to an unprecedented extent.
This diplomatic effort needs to be continued if Kenya is to make the most of the potential of the north.
The northern counties form a frontier zone in which events and policies in neighbouring states can sometimes exert more of an influence on the day-to-day lives of its residents than those emanating from elsewhere.
Secure borders and good relations with Uganda, South Sudan, Ethiopia and Somalia are essential. This is a region in flux. Uganda’s succession politics, South Sudan’s disputes with Sudan and Somalia’s problems all make difficult any attempt to forecast the long-term political future of the region.
What is certain is that Kenya’s leaders will have to adjust to a new era in which northern Kenya and the lands beyond it are at the centre, and not the margins of political calculations. A new era in Kenya’s history has begun.