Inklings of Sibling Squabbles
While the outcomes of the meeting in Kampala were vaguely shared in a communique issued by the two countries, a joint ministerial commission (JMC) between Kenya and Uganda inked a way to resolve a 6-month oil import dispute. In September 2023, Kenya declined to issue Uganda National Oil Company (Unoc) with a license for a direct import of fuel through the port of Mombasa escalating a dispute that led to Kenya being sued at the Region’s apex court. The East African Region has been at a crossroads in commodity handling with national interests and bad blood preventing mutual benefits from existing infrastructure.

Kenya’s Pipeline Corporation and local oil firms had been handling over 90% of Uganda’s 2.5 billion liters of petroleum imported annually with the latter, a landlocked country often incurring extra costs from middlemen and brokers. Noting the differences in national resource endowment, the promise of regional integration, a cornerstone of economic development plans, hinges on the ability of EAC nations to collaborate on infrastructure projects of mutual benefit. While the Kenya-Uganda agreement symbolizes a broader vision of regional integration and mutual economic benefit, can the EAC nations learn to share existing infrastructure to enhance regional trade and economic growth?

Resources and the Rationale for Regional Integration
The Kenya-Uganda oil pipeline agreement aims to construct a pipeline that will facilitate the transportation of oil from Uganda’s oil fields in the Albertine Graben region to the Kenyan port of Mombasa. This project has far-reaching implications for both countries and the East African Community (EAC) as a whole. By leveraging regional infrastructure, Kenya and Uganda can transform their economic landscapes and set a precedent for other nations in the region.

Uganda’s President Yoweri Museveni (L) on a two-day State visit to Kenya when the oil deal was formalized. PHOTO | Public Service Commission (Kenya).

Kenya is highly endowed with over 1,792 kilometers of multiproduct pipeline and associated facilities that help meet its needs in addition to supporting neighboring nations such as Uganda. This is in addition to shared borders, such as Namanga with Tanzania, and Busia and Malaba with Uganda which ought to facilitate cross-border trade such as in fuel transportation. Compared to its landlocked counterpart Uganda, Kenya has an extensive 536 kilometers long coastline which ought to enhance the transit of goods into the East African region for her benefit and that of limited neighbors.

“Investing in shared infrastructure would therefore lay the groundwork for a more integrated and economically vibrant East Africa enhancing the region’s competitiveness and attracting more investment.”

At the Port of Mombasa, the Kipevu Oil terminal serves as a crucial 770-meter resource and infrastructure consisting of four berths and a work board wharf for petroleum landing facilities, an advantage that landlocked neighbors lack. Fitted with liquid petroleum Gas (LPG), crude oil, and heavy fuel oil handling facilities, the resource ought to be a crucial enabler for trade and regional integration in the region as opposed to a source of conflict. The promise fueled Kenya’s additional investment of $385 million at the Kipevu Oil Terminal 2 in Mombasa and a $170 fuel jetty in Kisumu to serve the Uganda, Rwanda, and Burundi markets.

Trade deals, such as through regional trade blocs such as the East African Community, Continental such as the African Continental Free Trade, and bilateral such as between Kenya and Uganda exist to enhance mutual benefit from resources for continued economic success. Particularly, nations enter into deals to enhance their benefits from comparative advantages by using their resources to gain what they lack in continued development and natural endowment. It is only imperative that, nations seeking shared interest around economic development and regional integration, such as Uganda and Kenya find mutually beneficial ways of utilizing resources while minimizing conflict.

Fueling Economic Growth
The construction of the Kenya-Uganda oil pipeline is poised to significantly boost economic growth in both countries. For Uganda, which has substantial oil reserves, the pipeline offers a direct route to international markets. This will enable Uganda to monetize its oil resources more efficiently, generating substantial revenue that can be reinvested into other sectors of the economy. Additionally, the pipeline will create jobs during its construction and operational phases, further stimulating economic activity.

Kenya, on the other hand, stands to benefit from increased transit fees and the development of ancillary industries. The port of Mombasa will see heightened activity, which will boost the local economy and create jobs. Moreover, the improved infrastructure will attract more investment into the region, as businesses seek to take advantage of the enhanced logistics and transportation network while strengthening its position as a regional energy hub.

The pipeline agreement is a significant step towards enhancing regional trade within the EAC. By providing a reliable and cost-effective means of transporting oil, the pipeline will reduce the dependency on road transport, which is often hampered by poor infrastructure and logistical challenges. This will lower the cost of doing business and make East African oil more competitive in the global market. Further, the pipeline can serve as a critical piece of infrastructure that can be leveraged for other regional trade initiatives. For example, it can be integrated with other transport corridors, such as the Northern Corridor, which links the landlocked countries of Uganda, Rwanda, and South Sudan to the Kenyan port of Mombasa. This integration will create a more cohesive and efficient trade network, facilitating the movement of goods and services across the region.

Shared Infrastructure for Regional Integration
The Kenya-Uganda oil pipeline is more than just an economic project; it is a symbol of regional integration. By working together on such a large-scale infrastructure project, Kenya and Uganda are setting an example for other countries in the region. This cooperation demonstrates that by pooling resources and expertise, African nations can achieve greater economic prosperity and reduce their dependency on external actors.

It is therefore a potent indicator of how shared infrastructure can be a catalyst for regional growth. This sets a stage for continued collaboration on similar projects and infrastructure, such as a unified railway network connecting landlocked countries to ports, or a regional power grid ensuring energy security for all. This is a gateway to a more interdependent and resilient East African region.
Notably, such shared cross-border projects align with the goals of the African Continental Free Trade Area (AfCFTA) which seeks to create a single market of 1.3 billion people, a collective GDP of US$3.4 trillion, and enhance integration across the continent. Investing in shared infrastructure would therefore lay the groundwork for a more integrated and economically vibrant East Africa enhancing the region’s competitiveness and attracting more investment.

While the promise of such collaboration is obvious, nations must prioritize trust-building measures while focusing on long-term mutual benefit. This is in addition to the framing of project execution adequately to ensure equitable benefit distribution. The Kenya-Uganda oil pipeline agreement is a landmark project that highlights the importance of shared infrastructure in enhancing regional trade and economic growth. The prioritization of collaboration on infrastructure development can enhance a more integrated East African Region and position nations to benefit from their comparative advantages.