Monday’s meeting between presidents Uhuru Kenyatta and Yoweri Museveni over the routing of the oil pipeline was not conclusive. Instead, the leaders resolved to have another one in two weeks in Kampala to give technical teams time to consult and explore options that could be acceptable to both countries.

At the heart of the matter is the decision by Uganda to enter into a deal with Tanzania to put up a pipeline from Tanga to Hoima, otherwise referred to as the Southern Route, instead of the route through Lamu-Lacor-Hoima in western Uganda, conversely, called the Northern Route.

The driving reason for this was that the Kenya route option is fraught with challenges. Related to this are the inefficiencies at Kenya’s ports. Mombasa port is notorious for delays in clearing of goods due to internal inefficiencies as well as corruption, both of which raise the cost of doing business.

Further, there are serious concerns about the security of the pipeline across Kenya, given the past cases of oil leaks. Although not expressly stated, Uganda is still alive to the dangers of political violence in Kenya, given what happened in 2007/8 when the rail line was destroyed and transportation of goods from Mombasa halted, causing commodity shortages across the border. Added to this is the non-tariff barriers that also increase costs.

The loss of the oil pipeline business to Tanzania is not exciting. It sends a negative signal that Kenya is no longer an ideal destination for business. It leads to exportation of jobs and, therefore, denies local residents a chance to earn a living.

At a time when the country is investing heavily in infrastructure, including the Lamu Port Southern Sudan-Ethiopia Transport Corridor, it stands to reap economies of scale if it has contracts with more neighbours.

Kenya has to re-examine its business practices and deal with the factors that put off neighbours, such as inefficiency and the non-tariff barriers.

Source: All Africa News

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