Industry scepticism about the project’s economics notwithstanding, on 23 January, President Uhuru Kenyatta shook hands with Total executive committee member Momar Nguer to confirm the French major’s commitment to investing in the Lokichar-Lamu oil pipeline. These things matter in East African oil and geostrategic manoeuvring; Uganda’s export pipeline was planned to pass through Lokichar until Total backed a rival route to Tanzania, but having since bought Maersk Oil, it needs an export route in Kenya too. “Kenya is optimistic that the entry of Total into the joint venture will strengthen the financial resources and technical competence that is required to accelerate the development of the resources,” State House spokesperson Manoah Esipisu was quoted as saying.
Kenya retains the image of being significantly more investor-friendly than many of its neighbours. However, despite the promise of increased growth and lower inflation, one of Africa’s top ten economies struggles to deliver adequate jobs, services and other goods to its 47m population.
The electricity supply industry needs to focus on improving transmission and distribution, while expanding access, but potential investors privately complain that too many contracts still go to firms with strong political connections – a perennial Kenyan problem that critics say is stalling some ‘clean’ commercial deals. This is expected to continue during Kenyatta’s current term and in the run-up to wealthy vice-president William Ruto’s expected run to become head of state in 2022.
Kenya-watchers say Kenyatta’s (Kikuyu) clan is already working to undermine what will be (Kalenjin) Ruto’s well-funded campaign. In parallel comes the unresolved issue of how Kenyatta’s Jubilee Alliance administration can work with the opposition, led by the veteran Raila Odinga, who made headlines by having himself sworn in as president on 30 January. The ceremony was an expression of his refusal to accept the failure of his National Super Alliance (Nasa) to gain power last year – arguing that the first election, in August, was stolen and then boycotting a second poll called after the Supreme Court overturned the result. Many of his Nasa allies stayed away from the swearing-in, but Odinga’s core support – and his brooding sense of grievance – will not go away.
This does not bode well, but Kenya remains a resilient polity. The 2017 elections tested the democratic system and produced an impressive expression of the separation of powers as the Supreme Court overturned results that the Independent Electoral and Boundaries Commission – and foreign observers – had deemed free and fair. That may have proved the high watermark of judicial independence, but it has set an impressive benchmark.
Kenyatta’s stand-off with Nasa will remain a nagging factor in political life that could yet have wider negative consequences. The administration needs a fillip for its population from the economy, while also making efforts to build political consensus. After slowing in 2017 when electoral concerns predominated, the World Bank projects growth at 5.5% this year, above the sub-Saharan average (forecast at 3.2%).
Amid concerns about rising public debt – which analysts have said could exceed KSh5trn ($48.9bn) this year – and with agencies including Moody’s Investors Service holding the sovereign rating under review for a downgrade, sound macroeconomic management is a priority. The Treasury is mooting a new Eurobond, expected to be launched in March/April, to help tackle debt maturities by retiring expensive syndicated loans. But the figures that really count are that over 52% of the population are aged 19 and younger. Jubilee has promised a popular programme of increased social spending, free secondary education (albeit with added-on charges) and a public sector wage hike. How this squares with the difficult fiscal situation remains to be seen. Unleashing further private enterprise would help – not least in the distributed energy technologies and smaller scale financial services where Kenya is already a leader. Creating the sort of economic environment that can accommodate the population bulge will require the maximum of focus – and civic responsibility – from Kenya’s ruling class.
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