The Lamu Port and South Sudan Ethiopia Transport (LAPSSET) corridor is a very large-scale multi-stakeholder project. Aiming to foster transport links between Kenya, Southern Sudan and Ethiopia, the project will include a new road network, railway line, an oil refinery and pipeline, two airports and a port at Kenya’s South-Eastern town of Lamu, with further plans for two resort cities. With help of partners from different sectors, LAPSSET aims to open up previously underserved parts of northern Kenya to integrate them into the national economy. Better infrastructure can also promote the wider region’s economic development by boosting cross–border trade. It is expected that the project will contribute to an additional 3% increase in Kenya’s GDP by 2020. However, the year of final completion of the project is not known and is difficult to project.
Much of Kenya’s development co-operation now involves many different players, with parliament, civil society and the private sector taking part. This followed the country’s 2013 Public Private Partnerships Act that established the Public Private Partnership (PPP) Unit, which focuses on serving the secretariat and technical arm of the PPP Committee. The PPP committee is mandated to assess and approve PPP projects in the Country. Several multi-stakeholder partnerships form part of Kenya’s Vision 2030 long-term development plan.
Kenya’s new Public Private Partnership Unit (PPP Unit) reports that around $2-3 billion in extra funding is needed per year to address all of the country’s infrastructure requirements over the next five to eight years. The Kenyan Government is engaging the private sector to bring additional capital to fill this funding gap and to improve public services.
While LAPSSET was designed by the Kenyan Government, funding and implementation is envisaged to come from many different partners, with private sector partnerships essential to help fund the heavy investment of about $24.5 billion needed for the project.
A consortium of companies, the China Communication Construction Company (CCCC) won the tender to construct three berths at Lamu Port under a $484 million contract signed in August 2014, before eventually transferring them back to the control of the Kenyan Government at a later date. Construction of access roads is also ongoing with the 505 km Isiolo-Moyale A2 road jointly funded by the African Development Bank, European Union and Kenyan Government to improve transport between Addis Ababa, Lamu and Nairobi.
“Even if a government received loans to cover that amount, it would outstretch our debt limit. Since private companies will only invest where they can earn profits, partnerships can then be built in areas where the private sector can get a return on their investment by charging user fees, for example, berths at the port and also toll stations along the main highways,” said Monica Asuna, Senior Economist and Head of the Aid Effectiveness Secretariat in the External Resources Department of the National Treasury.
The first challenge for LAPSSET was how to manage the new, multi-stakeholder partnership model. A High Level Project Steering Committee of Cabinet Secretaries was formed in October 2014 to deliver the program. However, Kenya’s recently-formed PPP Unit is still trying to build its capacity within the National Treasury.
“As Kenya hasn’t been involved in any public private partnerships of this nature and magnitude before, getting the right mix is still challenging, especially without previous success stories to use as examples,” Ms. Asuna said.
“Some partners want to see how a few others fair first so there is a slow take-off. Kenya’s PPP Unit is new, and you need to build capacity to understand how the private sector can work with government. Before, both were working alone and now they need to build a working relationship.”
The Busan Partnership Agreement pledges further engagement with the private sector as a development actor, as well as inclusive and effective development partnerships in support of development goals, recognising the different and complementary roles of all actors. The Government of Kenya has made infrastructure development through Public Private Partnerships (PPPs) such as LAPSSET a priority as a mechanism that can help it address the major infrastructure gaps in the country.
The projected completion date for LAPSSET is 2018, but slow take-off for the financing and procurement process may delay progress. There were also appeals on procurement process by Members of Parliament when the China Roads and Bridges Corporation was taken on board, slowing down the process and highlighting challenges of securing the buy-in of all actors. They cited lack of competitive bidding in the process. In addition environmentalists also complained of the destruction of marine life at Manda Bay, Lamu and Pate islands and the local community also felt left out in the plans and discussions since some were going to lose their land.
Some communities along the LAPSSET Corridor route also originally resisted the project. However, many local people were brought to the table through dialogue first with local leaders to get their buy in. The leaders were then tasked with sensitizing the locals on the benefits of the project to the economy of the area. Once they understood that the new infrastructure would open their communities to trade, with construction jobs already arising for casual labourers. A new dam will also be built to bring electricity to a previously underserved area.
“Through the dialogue process, the National government learned that it was also important to inform local government leaders of the benefits of the project in their communities. It was important to inform these leaders of how the project would benefit them so that they get buy in and pass these messages on to the local people.” Ms. Asuna added. This because in most instances, locals listen mostly to what their leaders say, more than to the National Government.