Kenya and Africa’s latest independent state – South Sudan

(HornTrade) – Kenya is tapping billions of shillings in new investments from what is emerging as an early harvest of the fruits of the looming birth of Africa’s latest independent state — South Sudan.

East Africa’s largest economy has emerged as the major beneficiary of the expectation that Southern Sudanese will choose independence in January — sparking a race among foreign governments with the financial muscle to develop infrastructure that the new state will require to trade with the world.

South Sudan currently relies heavily on Port Sudan to take its key export, oil, to the global market, raising its exposure to the North in the event of political disagreement between the two after the separation.

Analysts at the Brussels-based International Crisis Group (ICG) say the South’s search for an alternative transport corridor to reduce its dependence on the North has opened for Kenya an opportunity to attract billions of dollars in fresh infrastructure investment and an advantage in the scramble for foreign direct investments to East Africa.

“As East Africa’s economic powerhouse, Kenya stands to benefit from the emergence of a large new market in South Sudan and major infrastructure that the country will need to engage commercially with the world, including oil exportation,” says ICG in its latest report on the possible impact of Southern independence on neighbouring states.

Kenya has already bagged nearly $5 billion in new investment as Asia’s economic giants Japan and China scramble for a share of the infrastructure that South Sudan will need to secure its trade with the world after independence.

The projects include construction of an oil refinery and sea port in Lamu, a 1,400 kilometre oil pipeline that will link Juba, Southern Sudanese capital to the Lamu port and construction of a new Mombasa-Kampala standard gauge railway line.

Heavy investment is also being made in the 1,130 kilometre road that links Nairobi to Juba to cut the more than 26 hours it currently takes to cover the distance.

The combined cost of the projects is estimated at $10 billion (Sh750 billion) or 34 per cent of Kenya’s Sh2.2 trillion gross domestic product (GDP).

Southern Sudan remains totally dependent on Port Sudan, in the country’s North, to export oil – its main source of revenue that has attracted heavy Chinese and Japanese interest.

Lamu’s deep waters have earned it top marks as the possible location of a new port that the Kenya government has wanted to build since the 1980s with little success in raising the money it needs for it.

It now appears that the emerging geopolitical situation is working to Kenya’s advantage offering the potential to upgrade its infrastructure and create thousands of new jobs.

Japan and China — keen to protect their investments in Southern Sudan— have signed multi-billion shilling contracts with the Kenya government to help finance the projects, setting the stage for execution of the public works with the potential of transforming the country’s infrastructure.

Japan and China have been the most aggressive investors in Southern Sudan pursuing oil and gas they need to drive their economies – which are ranked the world’s second and third largest, respectively.

Sudan’s oil deposits are estimated at 6.614 billion barrels with 85 per cent of it located in the South.


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