Of Zombie ideas, Misinformation, and “White elephants”

Lamu Port: Kenya's Brand new Port

Reading the persistent criticism of Kenya’s development path, one could be forgiven for thinking that Kenyans elected a government of corrupt fools. The country has developed some mega infrastructure projects in the last 20 years. A large number of them are complete and operational. A large number of others are still under construction.

Yet “outcry” about the projects persists. The cacophony of noise is confusing: the cost is bloated, the implementation is slow; it is not the right standard; its build on expensive Chinese loans by expensive Chinese contractors. On completion, the issues turn to the viability of the projects.

The protestors embrace conspiracy theories and propagate falsehoods clothed in inept comparisons – comparing Apples with Oranges-so to speak. They ignore the simple economics truth that, price is determined by factors that vary from product to product. They also ignore facts on the ground. Consequently, the protests can be termed mere rumormongering.

 For instance, critics could not understand how an 11-Kilometer dual carriage road cost US$1.1 billion nor could they understand why a 467 Kilometer cost US$2.7 billion while a 705-kilometer SGR in Ethiopia cost $3.5 billion.  They did not find out.  If they did, they would found the following structural and design differences on the standard Gauge Railways.

The Kenyan line is elevated -in some instances up to 43 meters high- because of the rugged terrain on which it is built. It has 29 Kilometers of bridges and has no level crossings. The 705 KM Addis- Djibouti line is built on relatively flat terrain with few bridges.  We say nothing of the Tanzanian line, which is still under construction.  Both the Kenyan and Ethiopian lines are operational.  Engineers tell us that Bridges comprise 30 percent of the cost of a road and railway project.

Two, the Kenyan line is Chinese Class one standard with an axle load capacity of 35 tons while the Ethiopian line is Chinese class two standard. It has an axle load capacity of 20 tons. Further, while the Kenyan Line can carry double-stack containers, the Ethiopian line carries a single stack.

Three, while Ethiopia has an electric train, Kenya has diesel- propelled engines because Kenya did not have the spare electricity capacity to power a railway line. Kenya has since built sufficient electricity generation capacity to power railway locomotives. While in Ethiopia electricity only feeds the line, in Kenya the plan is to provide electricity to the line and the adjoining areas.

Four the Kenyan line has more railway stations along the line than the Ethiopian Line.

The same inept comparisons are also evident in the soon -to -come live Lamu Port which, critics have branded a “potential white elephant.”  Why is this? Because they say, Ethiopia has lost interest in Kenya’s Port. This is ignorant.

Granted. Ethiopia is eyeing three other ports along the Red Sea coast.  These include Berbera Port in Somaliland, Djibouti Port in Djibouti, and Assab Port in Eritrea.  Why is Ethiopia eyeing all these options?  Here are alternative facts:

Ethiopia is a large landlocked country in Africa measuring 1.1 million square Kilometers.  That is 61 percent of the landmass of the East African common market block, - Kenya, Tanzania, Uganda, and Rwanda combined.   For a country this large, fronted by neighbors with access to the sea, developing several trade routes is a rational choice.  Each seaport saves on travel time and costs to specific regions in Ethiopia.

Further, Ethiopia is the fastest growing economy in the region, raising its demand for logistic services. Currently, Ethiopian freight congests the Port of Djibouti, its major trade route. In an attempt to decongest Djibouti Port, Ethiopia and Djibouti constructed the problematic Addis-Djibouti Standard Gauge Railway line, which has not solved the problem owing to operational bottlenecks.

 Further, the ports along the Red Sea coast are small: Djibouti has a capacity of 350,000TEUs a year, Berbera Port in Somaliland will have a capacity of 500,000 TEUs a year, and the Donaleh Port in Eritrea is equally small with roughly 400,000TEUs capacity.

Not confined to East African hinterland

The Kenya Port of Lamu on the other hand has a large capacity. By October this year, the first three berths will have a capacity of 1.2 million TEUs, which is larger than the other three ports combined. It is designed to handle 24 Million TEUs, at its full capacity, way beyond any of the Ports in the Red Sea coast. Being a deep sea Port, it can harbor Post-Panamax Ships.

 Lamu Port, to the South of Ethiopia targets trade to and from “the industrial Zones in Adama and Hawassa in Ethiopia which specialize in “Textiles, Motor Vehicle assembly, and Food processing,” it also suitable as a transshipment port for Ethiopian cargo destined for the three smaller Ports.

A few more facts about the Lamu Port are in order here.  Contrary to the popular view that the Lamu Port corridor was conceived in 2012, it was, in fact, conceived back in the 1970s when Mwai Kibaki was the Finance Minister.  It was revived in 2012 when Kibaki was the President of Kenya.  In the 1970s, it was conceived to open up two-thirds of Kenya’s landmass for economic exploitation.

Kenya’s robust economic growth was, and still is, driven by a third of the country’s landmass- the area around the Kenya- Uganda Railway.  Opening up the Lapsset Corridor, experts then argued, would shift Kenya’s growth trajectory upwards by adding more resources. That argument is still valid today. Experts say that the high cost of developing a Greenfield project for a young nation discouraged its development in the 1970s. It thus was shelved.

So is Lamu Port a potential white elephant?  We reject this thesis. The Ports on the Red Sea coast are not a threat to Kenyan Ports. In fact, the Lamu Port is complementary to the other ports in the region.

 The Port hinterland reaches beyond East African region to the Port of Douala in Cameroon on the Atlantic coast. As the Great equatorial bridge. That is why the African Union has adopted the Lapsset project as a pan African project to raise its profile and attract financing for the remaining 29 berths.

Finally, infrastructure projects are designed to engender more benefits than financial profits. For instance, a new road may not have any financial return, but it eases transport, lowers transport costs, reduces air pollution as a result of faster movement of vehicles, improves the health of the people neighboring the road, opens up business opportunities along the road. These benefits accrue to the private sector. This is also true of Ports and Railroads.

To sum up, the ideas we read regarding Chinese loans to African countries smacks of hypocrisy. Any debtor is no friend. A debtor is just a debtor and will take something from you in return. The myth that some debtors are friendly and humane is a sham.

These ideas are common in the West especially in the US where Republicans embrace Zombie ideas-false economic hypotheses- that support corporate greed. Among these empty theses is the small government thesis; the efficient market thesis, the trickle-down thesis and the low -wages -create jobs thesis. These are hot hair theses whose empirical evidence is hard to find.  Instead, evidence of their failure in form of; rotting physical and social infrastructure, growing income inequality, and social tensions abound. 

The same ills will bedevil Africa if Zombie ideas flourish. They will bequeath poverty on the future generations!