Nile Basin – No Deal After Summit

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Discussions between Nile Basin countries fail to reach agreement as many leaders boycott talks.

The Nile Basin Summit from June 20-22nd was convened to provide an opportunity for the ten countries reliant on the River Nile to agree on the equitable use of the resource. Tensions around the vital water source have persisted for many decades.

Initial signs, however, were less promising as a number of leaders chose not to attend. Sudanese President Omar al-Bashir and his South Sudanese counterpart Salva Kirr notified the delegates that they would skip the event.

The summit brought together all countries along the River Nile and was attended by Egyptian President Abdel Fattah el-Sisi, Ethiopian Prime Minister Hailemariam Desalegn, South Sudan Vice President Joseph Wani, Burundi’s 2nd Vice President Joseph Butore and Sudan’s Vice President Hasabo Mohammed Abdul Rahman.

The leaders of Kenya, Rwanda, Burundi and Tanzania also turned down invitations to attend at the last minute, although no clear reasons for the decision were given by the respective embassies.

It was clear during the meeting that an agreement on the equitable use of resources was proving difficult as stakeholders repeatedly walked out of meetings at the Speke Resort Munyonyo in Uganda.

Led by Sudan, water security experts walked out a meeting at 10pm on June 21st, while Ethiopia followed suit. In the large the summit was organised to nudge Egypt, the biggest beneficiary of the Nile basin, to join the Nile Basin Initiative (NBI).

However, Egyptian Minister for Irrigation and Water Resources Mohammed Abdel-Atti said that his country would only rejoin if some provisions in the draft Cooperative Framework Agreement (CFA) were changed.

Al-Sisi reportedly said that his country was suffering from a water deficit of 21.5 billion cubic metres per year. However, although Egypt hasn’t yet rejoined NBI, it will engage in development projects in the region.

Speaking to journalists, Ugandan President Yoweri Museveni said he and his colleagues discussed development issues. Despite only three heads of state being present, Museveni said they decided to meet as leaders to discuss the ‘strategic issues of the Nile.’ reported the Observer. 

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Nile Basin – Source: Africa Water.

According to Museveni, prosperity for the Nile Basin countries is the best way to protect the river and other vital water systems in Africa. He pointed out a number of key threats to water systems.

These threats included the growing population, lack of electricity supply, lack of industrialisation, over-reliance on primitive agriculture and the destruction of the environment on which the Nile depends.

He said that industrialising the Nile Basin would resolve the problems of the bulk of the population engaging in primitive agriculture, pushing many into the industry and service sectors. He added that this would reduce the strain on the environment through the invasion of wetlands and destruction of forests for agriculture, reported the Uganda Media Centre.

Of course this sort of solution is denounced by others who note how industrialisation will lead to further environmental degradation and pollution, and raise levels of inequality as groups are incorporated, often on adverse terms, as labourers in the service or manufacturing economy.

Further, a deal between Egypt, Ethiopia and Sudan signed in December 2015 whereby the three countries agreed to end tensions over River Nile water, is also facing an unclear future due to ongoing tensions between Egypt and Sudan.

The two downstream countries at the end of April agreed to de-escalate tensions and end counter-accusations as well as import bans and deportations had brought relations between the two countries to tipping point.

Meanwhile Ethiopia continued its quest to bring Nile Basin countries on its side as its Grand Renaissance Dam nearing completion.

With electricity as a bargaining chip observers say Ethiopia will have an edge over Egypt which claims the majority share of Nile waters, given to it by a colonial agreement put in place by the British, reported the East African.

Find out more in the Africa Research Bulletin today:

Grand Renaissance Dam Project
Economic, Financial & Technical Series
Vol. 52, Issue. 3, Pp. 20795A–20795B

POWER: Egypt – Ethiopia – Sudan
Economic, Financial & Technical Series
Vol. 51, Issue. 8, Pp. 20543C–20545C

EGYPT – ETHIOPIA: Nile Dam Problems
Economic, Financial & Technical Series
Vol. 50, Issue. 10, Pp. 20154B–20155B

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Uganda – Corrupt Payments

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Parliament orders the repayment of fees paid to 42 officials following a victory in landmark tax arbitration case. 

The Ugandan Parliament has ordered all 42 government officials who had received a payout to refund the Ugandan Shillings (UShs) 6 billion that they had shared as a reward by President Yoweri Museveni for winning a landmark arbitration tax dispute.

The tax dispute related to British-based oil firms Heritage Oil and Gas and Tullow Oil. In July 2010 Heritage Oil and Gas sold its assets in Uganda to Tullow Oil for US$1.5bn, with the Ugandan Revenue Authority (URA) issuing a tax bill of $434m.

In May 2011, Heritage Oil and Gas initiated arbitration proceedings against the Ugandan Government for the release of $405m held by the URA following the scale of interests in oil blocks 1 and 3A in July 2010.

The case against Heritage Oil and Gas was decided in Uganda’s favour and therefore upheld URA’s assessment of $434m as Capital Gains Tax, reported Uganda-based, the Independent.

The payment to the 42 officials was a reward for their purported role in the arbitration case.

Most of the beneficiaries who received between UShs50m and UShs200m had also profited from a UShs56bn money pot which was passed by Parliament across seven financial years to facilitate Uganda’s legal team to prosecute the tax case against the two British oil firms.

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President Yoweri Museveni – CC 2012.

However, some senior officials who took a share snubbed the Parliament’s directive for a refund. They stated that they cannot refund the money since President Museveni supported the payment.

Solicitor General Francis Atoke, who pocketed UShs234m, said, “why should I (refund the money)? The money was paid to us, we did not ask for it even when we handled the case. It was the principal (Museveni) who gave us (the money) and we used it, so refund what? There is nothing to refund.”

While the parliament committee’s report does not explicitly name the officials, it accuses URA Commissioner General Doris Akol of violating the URA Act and Public Finance Management Act when she authorised withdrawal of UShs6b from URA account, reported the Monitor.

The notable beneficiaries of the so-called presidential handshake also include Uganda National Roads Authority (UNRA) Executive Director Allen Kagina and Kampala Capital City Authority (KCCA) Executive Director Jennifer Musisi among others, reported the Observer

Uganda continues to suffer from widespread corruption, which hinders business and investment in the country. There have been numerous reports of bribes and under the table payments within high level government circles.

Find out more in the Africa Research Bulletin:

ROADS AND RAILWAYS: Uganda
Economic, Financial & Technical Series.
Vol. 54, Issue. 2, Pp. 21618B–21619B 

UGANDA: Drought Hits Hard
Economic, Financial & Technical Series.
Vol. 53, Issue. 12, Pp. 21533A–21534A

UGANDA: Kasese Inaction Criticised
Political, Social & Cultural Series.
Vol. 54, Issue. 5, Pp. 21445A–21446C

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Uganda – Oil Refinery Project

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The government seeks to resolve tender for huge project, as they look to Nigeria for advice. 

Uganda has shortlisted four companies for the construction of the US$4.27bn (UShs 15.3 trillion) oil refinery, according to Energy Minister Irene Muloni.

Muloni made the announcement during a session of the joint Uganda Chamber of Mines and Petroleum, Uganda Freight Forwarders Association and Private Sector Foundation, inaugural logistics fair in Kampala from April 25-27th.

A decision on the chosen tender is to be made within a month, said acting director of the refinery, Robert Kasande. However, others have said there are not four but eight companies in the bidding.

The companies are Canadian firm SNC Lavalin, United States (US) firms Yatra Ventures LLC and Apro, and Turkish firm IESCO. Others include Chinese-based Guangzhou Dongsong Energy, Spanish firm Profundo Bantu Energy, and Italy’s Maire Tecnimot.

Uganda had previously picked Russian firm RT Global Resources, but the Russian eventually pulled out citing failures by the Ugandan government to meet demands.

The decision needs to be made soon to allow a final investment by three oil firms, CNOOC, Total and Tullow, which revolves around the US$3.5bn East African Crude Oil Pipeline from Hoima disrict in Uganda to Tanga Port in Tanzania. The 1445km pipeline will be the longest electrically heated pipeline in the world, with a capacity of 200,000 barrels per day.

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Tullow Oil Refinery – CC 2010 

Another central aspect of the project is a refinery to be built at Hoima, for which financing is still yet to be ascertained, reported the Monitor.

In February the government relocated 46 families to make way for the refinery in Kabaale parish, Buseruka sub-county, Hoima. In June 2012 the government acquired the 29 square kilometres of land, covering 13 villages and displacing 7118 people.

Francis Elungat, the Land Acquisition Officer from the Ministry of Energy and Mineral Development said, “each family has been promised a cow, two goats, 10 kilograms of maize seedlings, a machete, hoe and other domestic tools,” adding that these supplies are meant to sustain the families until they will be self-reliant, reported Oil in Uganda. 

According to the Deputy Commander of Operations for Wealth Creation in Uganda, Lt Gen Charles Angina, Uganda is looking to learn from Nigeria in the oil sector.

“Nigeria is our admired African country who have demonstrated and exhibited local content in building and running its energy sector. And they have managed to promote this particular sector to a point that Nigerians now actively involved in different segments of the nation’s oil and gas sector. We felt Nigeria is the best country to come and learn from as well as work with our brothers and sisters of Nigeria, so that we can be able to do the same in building the local content in Uganda, so that together we benefit as Africans,” he said.

“As it stands today, most of what we see in the field today, in terms of operators and operations in the sector were formerly dominated and run by foreign companies like Shell, Total, ExxonMobil, but today, Nigeria has gained substantial control of this sector,” Angina added, reported This Day.

In Uganda, at least six major oil-related engineering projects are rolling and major project milestones are set for August and December, with numerous other small deadlines.

Find out more in the Africa Research Bulletin:

UGANDA: Drought Hits Hard
Economic, Financial & Technical Series
Vol. 53, Issue. 12, Pp. 21533A–21534A

UGANDA: Diversify From Oil, World Bank Advises
Economic, Financial & Technical Series
Vol. 53, Issue. 6, Pp. 21315A–21315C

UGANDA: Major Investments
Economic, Financial & Technical Series
Vol. 53, Issue. 5, Pp. 21283A–21284A

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East Africa – Graft in Rail Investment

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Investigations into fraud and embezzlement are opened in one of Africa’s oldest railways.

An investigation, which has attracted the attention of the World Bank, suggests that Qalaa Holdings, which took over Rift Valley Railways (RVR) intending to revamp the rail link, has been involved in numerous questionable dealings. The World Bank has opened investigations into RVR, which manages the railway from Kampala to Mombasa in Kenya.

For many years one of the most importance rail routes in Africa has suffered neglect and underinvestment, until Qalaa Holdings, one of the biggest African private equity funds, sought to invest in the service.

An investigation by journalists from the UK, Belgium and Kenya under Finance Uncovered has obtained leaked documents and conducted interviews with rail staff. They noted that the company had created an offshore structure of shell companies to extract millions in advisory fees from RVR. The World Banks’ integrity unit has also opened investigations into fraud and embezzlement.

At the same time a parallel railway line, built by the Chinese, is set to open soon, which will be more efficient that the older line and is expected to absorb customers and profits, hampering more RVR’s already bad financial situation.

The British started the construction of the Kenya-Uganda railway in 1896, intended to secure Lake Victoria from German, Belgian and French colonial expansion. It later became known as the ‘Lunatic Express’ after many thousands died and millions were spent on its construction.

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Tororo, Uganda – CC 2010

In 2010 Qalaa Holdings, an Egypt based fund, took over through an offshore holding, Ambiance Ventures. In the subsequent year the company managed to secure US$287m in investments from a number of sources including the World Bank ($22m), the African Development Bank (AfDB) ($40m), and a number of others.

One central investment has been in new rolling stock, for which $63m was allocated for 20 “brand new” locomotives. However the journalists discovered that no new locomotives were purchased at all, instead they were purchased second-hand and refurbished from US-based National Railway Equipment Company (NREC). In total 20 locomotives were received for $20m rather than the stipulated $63m.

Regarding freight services, Chief Executive of the Kenya Ships Agents Association Juma Ali Tellah has said that many distributors have lost faith in the railways’ ability to transport containers; a blow as much of the railway’s income comes from freight.

“There are too many delays both in the port and during transportation…the skippers never know when their containers will reach destination. It’s not surprising that only a fraction of freight is transported by rail,” Tellah said.

Even though it currently has a monopoly, RVR has struggled to make profits under Qalaa’s management; in 2014 it reported losses of $1.5m. Despite not making a profit Qalaa has collected $4.7m of advisory fees from Africa Railways Limited, the investment vehicle of RVR registered in the British Virgin Islands. The firm has also paid very little corporation tax, and despite getting millions from state-backed development banks, many of its investments are managed through these offshore shell companies; while these corporate structures are not illegal, the investment will not fully benefit the home countries.

(The Observer, Kampala 22/6)

Find out more in the Africa Research Bulletin:

ROADS AND RAILWAYS: East Africa
Economic, Financial & Technical Series
Vol.53, Issue.5, Pp.21292B–21293C

ROADS AND RAILWAYS: Rwanda – Tanzania
Economic, Financial & Technical Series
Vol.53, Issue.4, Pp.21255A–21255C

ROADS AND RAILWAYS: Kenya
Economic, Financial & Technical Series
Vol.52, Issue.12, Pp.21112A–21112C

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Uganda – Opposition Leader Accused of Treason

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As the President is inaugurated for a fifth term, the opposition stages a mock ceremony in protest.

Opposition leader Kizza Besigye has been under house arrest since the Presidential elections earlier in February, in which he had disputed the results that declared President Yoweri Museveni the winner.

Besigye was arrested in Kampala on May 11th after managing to escape house arrest, staging a mock ceremony where he was sworn in as President; Lawyer Erias Lukwago said that he was then taken by security forces to the town of Moroto, around 400km away.

Lukwago commented that Besigye had been denied any legal representation and was charged with treason on May 13th; he was remanded in custody for a later court appearance on May 25th, reported Al Jazeera.

Besigye has been a long-standing opponent of Museveni and has been frequently jailed, put under house arrest and accused of numerous crimes. He was Museveni’s doctor in the 1980s war that brought him to power but has since run against him in four elections.

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Besigye election campaign from 2011 – CC

Museveni has been in power for three decades and was sworn in for a fifth term on May 12th after winning the February election with 61% of the vote. During the ceremony he criticised the International Criminal Court (ICC) which prompted a walkout by US and European Union (EU) diplomats.

The EU had called the atmosphere during the elections “intimidating” as the government banned live coverage of the protests, and also stated that the electoral body lacked independence and transparency.

Reports suggested that Besigye had managed to escape from 24 hour surveillance to make a surprise appearance in Kampala. The opposition Forum for Democratic Change (FDC) announced the alternative inauguration.

 A video emerged showing Besigye’s “swearing-in ceremony“; Besigye is seen walking up to a podium and signing an “oath of allegiance.” Besigye adds in the video that despite providing “incontrovertible evidence” showing that he won the election with 52% of the vote, the election process was not constitutional, reported the Observer.

Outgoing FDC opposition leader Philip Wafula Oguttu said, “we are casting doubt both at home and abroad on the legitimacy of Museveni’s presidency…they will see that this matter will have to be settled politically, not in Parliament or in court.”

Following the Presidential inauguration on May 12th, the East African reported that attention has now shifted to constitutional reforms, and there have been suggestions that Museveni may remove the age limit to allow him to further extend his reign, after previously extending term limits to run in the February elections.

Find out more in the Africa Research Bulletin today:

Uganda – Besigye House Arrest Lifted
Political, Social & Cultural Series
Vol.53, Issue.4, Pp.20965A–20965B

UGANDA: Post-Election Fallout
Political, Social & Cultural Series
Vol.53, Issue.3, Pp.20928B–20929A

UGANDA: Museveni Wins Fifth Term
Political, Social & Cultural Series
Vol.53, Issue.2, Pp. 20879A–20880C

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Africa – GMO Debate Reignited

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As a number of countries debate the use of GMO crops to address food security, others have stressed opposition to profit-driven agribusiness.

Recently, in August, Kenyan Vice-President William Ruto announced a move to lift a ban on Genetically Modified Organisms (GMOs) imports by the end-of October, with a wide-ranging selection of Ministers supporting the move. GMO crops are now free to be field tested in the county with sites already set up at Kalro field stations.

Currently there are trials for a virus-resistant transgenic cassava at Alupe; a vitamin A-enhanced cassava at Alupe; biofortified sorghum at Kiboko and virus-resistant cassava at Mtwapa, explained the East African.

The Daily Nation reported that the decision to lift the ban has reignited the debate around GMO crops with farmers groups protesting across the country; one group, the Kenya Small-Scale Farmers has sought an order from the high court to reverse the decision. Some have even called for investigations into the funding for organisations involved in the sector.

Some scientists do see GMO crops as the answer to stark situations of food security across much of the ‘developing world’; the Kenya National Farmers Federation (Kenaff) stated that the country needed modern technology, of which GMOs are a part.

Kenaff CEO John Mutunga, said that such technology would need to be backed by sound scientific evidence, to dismiss claims that such crops cause adverse health impacts, and to remove the vested interested and donor-oriented policy that dominates the sector.

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Cassava Seed (CC)

Tanzania is also planning trials for a GMO Maize variety for April 2016 in Makutupora area of Dodoma, conducted by Water Efficient Maize for Africa (WEMA), a public-private partnership led by Kenyan-based African Agricultural Technology Foundation (AATF) and financed by the Bill and Melinda Gates Foundation. The government recently revised its GMO laws to allow confined trials of maize and cassava, reported the East African.

Similarly the Director-General of the Nigerian National Biosafety Management Agency (NBMA), Rufus Ebegba, has said that the safe application of modern biotechnology will trigger an agricultural revolution in Nigeria.

“Modern biotechnology has the huge potentials to enhance the agricultural sector, promote industrial growth, and the medical sector; and it can also be used for environmental sustainability; but our agency is not to promote modern biotechnology or its products but to ensure the safety because we are aware that this technology has that potential for adversity especially in the agricultural sector” he said, reported Leadership.

Only South Africa, Burkina Faso and Sudan have officially adopted GMO food on the African continent . However the recent and ongoing drought across much of Southern Africa – with five districts in South Africa declared disaster zones–  and the effects of the El Niño weather phenomenon more widely across sub-Saharan Africa, has raised the urgent need for inclusive solutions to the problem of food security, particularly for the very poorest.

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Sorghum Market Ethiopia (CC)

A 2013 report accused scientists of conducting research that favours seed companies; the study by Canadian Professor Matthew A Schnurr claimed that GMOs could jeopardise the livelihoods of local farmers by supplanting locally derived and often resilient seeds, for new supposedly high yielding varieties.

The research, entitled Biotechnology and bio-hegemony in Uganda: Unravelling the social relations underpinning the promotion of genetically modified crops into new African markets, was based on over 70 interviews in Uganda with research scientists, policy experts, lobbyists, and promotional organisations between 2009 and 2012.

In relation to GMO cotton, the report details that the crops are resistant to species of bollworm. However Schnurr claims that bollworm is of limited problem in Uganda, and the crops still continue to be affected by black arm disease and other pests. According to Schnurr the market is supply rather than demand driven, and BT Cotton finds a ‘solution to a non existent problem’, report the East African.

The report also throws doubts on the ability of farmers to pay for the new SureGrow 125, a cotton variety from the United States (US), with evidence from South Africa showing that farmers are paying 30-40% more for their seeds. The variety, which is suited to American climate and mechanised picking, may be unsuitable for the Ugandan context.

It is important that the aims of improving food security and livelihoods for the most vulnerable people do not get lost amidst the rhetoric of a profit-driven agricultural sector. GMOs are likely to be a useful resource in some contexts, but it is important to also remember the wide-variety of foodstuffs, non cash-crops, and farming activities undertaken as livelihood strategies across Africa, which have a tendency to be forgotten in the privileging of monoculture, cash-return GMO crops.

The UN Food and Agriculture Organisation (FAO), on November 10th, launched its 2016 International Year of the Pulses, to “raise awareness about the protein power and health benefits of all kinds of dried beans and peas, boost their production and trade, and encourage new and smarter uses throughout the food chain”, reported the UN News Service.

“They have been an essential part of the human diet for centuries…yet, their nutritional value is not generally recognised and is frequently under-appreciated” said FAO Director-General José Graziano da Silva.

Find out more in the Africa Research Bulletin

SUB-SAHARAN AFRICA: Growth Slows, Food Insecurity Rises 
Economic, Financial & Technical Series
Vol.52, Issue.9, Pp.20979A–20980C

CEREALS: Southern Africa
Economic, Financial & Technical Series
Vol.52, Issue.6, Pp.20896C–20897B

FOOD: FAO Report
Economic, Financial & Technical Series
Vol.52, Issue.2, Pp.20752A–20753A

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East Africa: Investments in Rail Infrastructure

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Members of the East African Community pledge to use Central and Northern Transport Corridors to unlock the region’s economic potential

East African Community (EAC) member states, Tanzania, Kenya, Burundi, Rwanda and Uganda are hoping to implement joint infrastructure projects to further boost regional trade and growth. Tanzanian President and Chairman of the EAC, Jakaya Kikwete is quoted by Tanzania Daily News as saying “it is my wish to see the Northern and Central Corridors infrastructure to be one in the future”.

Following a Northern & Central Corridor Investors Forum in Dar es Salaam on March 25th, EAC members launched the construction of the US$14.2 billion East African Central Corridor Railway. According to Transport Minister Samuel Sitta the project will be “the single biggest project ever to be implemented by the Tanzanian government since our countries independence”, report Reuters.

The project will involve constructing 2561km of standard gauge railway to connect Dar es Salaam to landlocked neighbours of Rwanda, Burundi, Uganda, Zambia and eastern DR Congo,  costing around $7.6bn, while two other additional lines will be constructed to serve mining regions in the southern and northern Tanzania, at a cost of around $6.6bn. The main line will contain spur lines that will connect to Kigali, Rwanda, Bjumbura in Burundi, and Masaka, Uganda, explain Tanzania News Daily.

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Landlocked countries in Africa are reliant on rail and road links through to main coastal economic and commercial hubs; in East Africa particularly Dar es Salaam in Tanzania and Mombasa in Kenya. In direct competition to the Tanzanian railway plans, Kenya is also constructing a standard gauge railway, funded by China Road and Bridge Corporation, from Mombasa-Nairobi to Kampala.

The Kenyan government has claimed the new railway from Mombasa to the Great Lakes region will boost economic growth by 1.5% per year, report Ventures Africa, eventually extending to replace the ageing colonial-era narrow gauge railway that reaches towards DR-Congo. The initial 609 km section from Mombasa to Nairobi has been started with a finish date set for 2017.

China has agreed to finance part of a $3.2 billion Uganda rail plan, report East Africa Business Week; construction of the Eastern and Northern Standard Gauge Railway that will connect Kampala, Malaba on the Kenyan border and Nimule in South Sudan, while joining the wider standard gauge network, giving fruitful economic benefits from links to Kenya’s coastal commercial hub.

AFKInsider comment that Kenya and Tanzania are vying to be the preferred regional transport hub and with recent oil and gas discoveries in the region, the area has become a hive of exploration. Transport minister Sitta said “We are in competition at all times with the Mombasa port…its a competitive business so we need to be efficient”.

Both countries are also planning to invest in new port projects at Bagamoyo in Tanzania and Lamu in Kenya, report Tanzania Daily News. The Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) project was first proposed in the 1970s to provide Sudan and Ethiopia access to the Indian ocean. In 2013 China Communications Construction Co Ltd won the US$445 million contract for the first three berths of the port and according to the Kenyan government the LAPSSET project is nearing advanced stages. The project includes an economic corridor comprised of road networks, oil pipelines, three airports and a standard gauge railway network from Lamu to Juba, South Sudan and Addis-Ababa, Ethiopia (shown on map below).

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The majority of financing for large infrastructure projects across East Africa, and large parts of the African continent as a whole, is stemming from China, who have recently signed agreements with the African Union (AU) for a network of high-speed rail links in the next few decades.

Chinese companies and banks are financing a variety of railway projects across the region  including the Addis-Ababa Light Rail Transit System in Ethiopia. In 2014 China Railway 20 Bureau Group Corporation completed the reconstruction of the Benguela railway connecting Angola, Zambia and south-eastern DR Congo, and China Civil Engineering Construction Corporation (CCECC) is constructing the $4 billion, 740-km electric railway that connects Addis Ababa and Djibouti.

Open database, Aid Data, provide a useful visual mapping of Chinese-financed projects in Africa, available here.

Find out more in the Africa Research Bulletin

Roads & Railways: Kenya
Economic, Financial & Technical Series
Vol.52, Issue.1, Pp. 20715B-20716A

Ports & Shipping: Tanzania
Economic, Financial & Technical Series
Vol.51, Issue.10, Pp. 20607A-20608A

Roads & Railways: Uganda
Economic, Financial & Technical Series
Vol.51, Issue.8, Pp.20536B-20537C

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