An opportunity for Kenya in Ethiopia’s landlocked economy

If only we could get our politics right, there are rich opportunities that beckon quite simply because of the strategic position Kenya occupies. Uganda and Rwanda are already captive markets, judging from the volume of trade we do with them.

Burundi and eastern Democratic Republic of Congo are not far behind. Being landlocked, all of them rely on Mombasa for access to outside markets. Southern Sudan is fast coming into the same category.

Judging from the rush by big Kenyan banks to set up branches in Juba - from Kenya Commercial Bank to Co-operative Bank – the region is clearly the next to fall within the orbit of Kenyan enterprise. Matters will only improve if, in all likelihood, the region votes for secession from the larger Sudan in a referendum – mandatory under the terms of the 2005 Comprehensive Peace Agreement – in 2011.

But I think the real payoff will come when Ethiopia enters this enterprise zone. With its 80 million-plus population, Ethiopia dwarfs every other country in eastern Africa. It ranks second only to Nigeria in all of sub-Saharan Africa in terms of population.

A country of this size obviously presents unique opportunities that Kenya cannot afford to ignore. For starters, it is landlocked, a fate it suffered after its 2000-2002 war with Eritrea and the subsequent loss of the Red Sea ports of Massawa and Asab, forcing Addis Ababa to shift its trade through Djibouti.

Djibouti has a good port all right, but in the scheme of things, this fist of a country sandwiched between volatile Somalia and warlike Eritrea does not present Ethiopia with the long-term strategic peace of mind she craves. And due to long-standing mutual suspicions with neighbouring Sudan, Port Sudan on the Red Sea will not do either. That’s where Kenya comes in.

The Kenyan and Tanzanian governments recently signed a document initiating the construction of the Northern Corridor highway that is to link Kenya and Ethiopia from Arusha. The way the setup looks, Kenya stands to reap most, especially if it follows up on the project to build a modern port at Lamu.

Sure, vested interests at Mombasa’s Kilindini port are opposed to a rival port on the Indian Ocean coast, but they are short-sighted. Geographically, Addis Ababa sits about equidistant between Lamu and Massawa, or Port Sudan. Ethiopia is no longer the closed, Marxist economy it was under Mengistu Haile Mariam.

Under Meles Zenawi, it has been liberalising steadily. It may look poor, especially going by the cyclical famines that shock the rest of the world, but the fact is that its economy is bigger than Uganda’s or Rwanda’s or the other regional markets we rely on.

Ethiopia, too, knows quite well that closer ties with the Kenyan economy are nowhere comparable to what it gets from Sudan or Djibouti or Eritrea. Build a modern highway from Moyale to Lamu or even Mombasa, and the bounty will be great.

Besides, this highway will help to open up northern Kenya and help it emerge from its state as a pastoralist backwater. Consultants from Singapore have reportedly already drawn up feasibility plans for a modern port at Lamu.

All this opening up boils down to one thing: infrastructure. Finance minister Uhuru Kenyatta was right to allocate Sh140 billion in the Budget to roads and communications. Some Sh3 billion is to be allocated to modernise the practically obsolete Kenya-Uganda railway.

A rail link from South Sudan, and possibly an oil pipeline as well, would help fortify our regional position. Tanzania is already seeking donor funding for a new standard-gauge railway line to Kigali. Let us never forget that Tanzania has always eyed our Great Lakes markets with much longing.

Our propensity for political violence does not guarantee that these land-locked markets will not look elsewhere for more secure transport routes. The huge increase in the Constituencies Development Fund means that the way the individual funds are managed must be fundamentally overhauled.

We are no longer dealing with a few hundred million of shillings here. We are dealing with billions that will be directly channelled to constituencies, including money from the Roads Levy. Politics is such that it will be impossible to shove aside MPs from overseeing these funds.

But it is imperative that they engage experts and professionals to run CDF in their constituencies, not cronies and relatives. Otherwise this huge devolution bonus will not achieve its intended goal.