When Sudan's civil war came to an official end with the signing of the Naivasha Agreement in 2005, it was agreed that revenues from Sudan's oil resources would be shared equally between the government of Sudan in Khartoum and the new Government of Southern Sudan in Juba. Most of Sudan's oil is found in the South, but its refining and exporting infrastructure is in the North, including Port Sudan on the Red Sea. Should Southern Sudan one day secede from Sudan, Juba will want to severe its dependence upon Khartoum for the export of its oil.
The solution may be found in Lamu, a port city in Kenya which is closer to Juba than Port Sudan is. Over the past several years, regional government and business interests have been discussing a proposal to build an oil pipeline from Southern Sudan to Lamu. Those plans have been reinvigorated this year with talk of a "Second Transport Corridor" linking Southern Sudan, Ethiopia, and Kenya. The proposed Juba to Lamu Corridor may solve Juba's oil-to-market problem. Further, the other infrastructure projects that comprise the Corridor – a transnational highway and railway network, a new oil refinery, and tourist infrastructure – may allow Nairobi to tackle the economic underdevelopment of Kenya's northern regions. Should suspected oil reserves near Lamu materialise then the infrastructure will support Kenya’s oil industry, too.
The map at the right (click for larger image) shows the approximate route that the new pipeline will follow, although details are not public as yet. A quick glance will provide you with some idea of the possible challenges it faces.My fondness for Kenya to one side, several factors make this proposed project a matter of interest. These are issues that resonate with the challenges that other developing countries also face. There are questions of sustainable and equitable development; issues arising from the pipeline's position in or near conflict zones; regional geostrategic considerations; and of course the matter of where the required capital will come from. The management of these factors – and more – will determine whether the proposed project succeeds or fails.
If the Second Transport Corridor is to benefit northern Kenya, then its construction must be undertaken in an equitable and sustainable manner. It must be free of corruption and attuned not only to national and business priorities but to the needs of local communities. The areas through which the Corridor will pass are relatively poor. Some are affected by drought and chronic food insecurity. Others are the scene of localised conflict, including violence associated with contested natural resources and cattle-rustling. Communities in these areas need reliable infrastructure, employment opportunities, support for agriculture, access to markets, and sound governance. A poorly managed development project will exclude local communities and aggravate existing problems. What northern Kenya needs is investment that delivers benefits to local communities in an equitable manner.
The route of the pipeline also cuts across – or runs near – conflict zones beyond Kenya. The border between Somalia and Kenya is increasingly unstable. Large flows of displaced people are sheltering on either side of the border while violence continues in Somalia. At present, Kenya is preparing for possible military intervention in Somalia, while Somali militant groups are threatening reprisals to deter further interference. It may soon become necessary to involve the government of Somalia in the project. People in Southern Sudan, too, are experiencing violence and displacement. Both of these conflicts have the potential to flow across the border into Ethiopia. Infrastructure projects that cut across conflict zones risk inflaming existing grievances. Further, instability deters potential investors, especially if the host government has difficulty providing a secure environment or if actors in the conflict decide that the project itself is a legitimate target for violence. This would lead to further delays and higher costs.
The risk of conflict may also be viewed from a broader perspective. Kenya and Southern Sudan have been forging closer diplomatic ties for a number of years now. Juba is conscious of the military threat posed by Khartoum, and Nairobi may even be assisting Juba to arm itself as a deterrent to action by Khartoum. It would not be in Khartoum’s interests for the new Corridor to open, as Juba will no longer depend upon Khartoum for refining and export of its oil resources. There is a very real risk that Khartoum may act as a spoiler. For example, Khartoum could activate proxy militant groups in the region to destabilise Southern Sudan and delay decision-making about the project. Alternatively, it could interrupt construction once it begins, which would be costly – politically and financially – for the project’s backers. In response, Nairobi may decide that such interference represents a significant threat to Kenyan economic development and security. This would be bad for the entire region.
Finally, it’s worth considering where the funding for the Corridor will come from. National governments will certainly be making a significant contribution. Local companies, individually or in consortium arrangements, are likely to be involved in the major construction components, such as the pipeline, refinery, and port facility. However, while further research is required to be sure, it seems that the local business community doesn’t quite have the capacity required for such an ambitious project. In that case, sovereign trust funds and petro-state governments may come on board. At least one such offer has already been made; Qatar offered to contribute funding in exchange for a parcel of agricultural land in Kenya. This is a politically sensitive issue. There have been a series of "land grabs" of this type all around the developing world, and Kenyans have been angered about offers like this in the past. Securing overseas funding may be politically tricky.
The governments of Kenya, Ethiopia, and Southern Sudan will have their hands full managing the Second Transport Corridor project to a successful outcome. Local communities must be respected, conflict zones must be pacified, geostrategic rivalries must be addressed, and the necessary capital must be raised in a responsible way. No doubt there are other issues to consider, too. With proper management and care, however, the Juba to Lamu Corridor presents opportunities to all involved, particularly to Southern Sudan (in terms of economic independence from Khartoum) and to Kenya (in terms of economic development of the north).
In many countries in the global South, oil and other resources have been a "curse", attracting conflict and exploitation without generating equitable economic development for local communities. With careful planning and close cooperation, Kenya, Ethiopia, and Southern Sudan have an opportunity to ward off the oil curse and instead construct an oil blessing that will benefit many in East Africa.
