East Africa ports competition Sees Heightened Propaganda

September 14, 2013 10:05 am0 comments by:

Attempts by states to achieve and retain a position of dominance over others are a recurrent feature in international relations. This is now seen in East Africa as Kenya fights hard to retain its dominance as a largest economy in East Africa. This development is largely the result of the conflicting national ambitions of Tanzania and Kenya; each of which wishes to exercise paramount influence in the East Africa region. This competition, although hidden, has deep roots and is likely to intensify.

The nascent closer relation among Kenya, Uganda and Rwanda has to be understood outside the framework of the East Africa Community. The emerging ties among the three states underscore Kenya’s broad strategic interests in undermining the growing position of Tanzania as a rising economic giant in the region. In light of that, Kenya has taken advantage of Tanzania’s reluctance into full integration of the East African Community as an important propaganda weapon to protect its economic dominance. This is likely to become more important.

Ports politics

Let’s start with port politics; the current Nairobi policy towards Uganda and Rwanda, in general, is largely motivated by Kenya’s competition with Tanzania as the gateway to landlocked countries of Uganda, Rwanda, Burundi and DRC. This is the open secret, which the media analysing the trends in East Africa Community dynamics, have chosen to ignore. However, Manoah Esipisu the Kenyan Secretary of Communication was open enough to admit the trilateral meeting had nothing to do with the East Africa Community but, arguably, trade. He said, “Tanzania, they were not invited because at the moment we are dealing with the Northern Corridor. This was about the Port of Mombasa and the infrastructure that feeds the Northern Corridor.”

Mombasa port

Mombasa port

Why protect Mombasa now?

Kenya’s status as the region’s logistics hub is under threat after Tanzania signed a deal with China to set up the region’s largest port. The $11 billion Bagomoyo port will be bigger than the Dar es Salaam and Mombasa ports, pushing the scales of regional trade in favour of Tanzania.

Bagamoyo port will have the capacity to handle 20 million containers a year, compared with Mombasa’s installed capacity of 600,000 and Dar es Salaam’s 500,000. This capacity makes it very unattractive for anyone to invest substantial investments in Mombasa once the Bagamoyo port is operational. It is expected that Bagamoyo port will be the cheapest destination to ship in East Africa and it is therefore Kenya’s strategic interest to form the so called “the coalition of willing” under East Africa Community banner to ensure that they at least minimize market share risk which will be caused by the materialisation of Bagamoyo port project.

Tanzania Gas economy

Kenya has a second reason to be worried about its dominance, as currently Tanzania has a GDP (purchasing power parity) of $75.07 billion compared to that of Kenya which is $77.14 billion. Moreover, Tanzania is sitting on a verified mountain of natural gas resources, enough to make it the largest economy in East Africa and beyond. The current confirmed gas reserve stand at 43 Trillion Cubic feet (TCF), which is valued around $430 billion and it is expected that Tanzania’s natural gas resources will rise to 200 trillion cubic feet after the next two years which will be valued at $2.1 trillion.

What this mean to Kenya vs Tanzania Competition?

Putting aside the $10 billion LNG export plant that Statoil and BG are considering building in Tanzania, the country has also embarked on a quick implementation of its energy master plan, which is a deciding factor for business environment in East Africa.

To start with, Tanzania has invested heavily in domestic gas production project that will transform the country’s economy and make its manufacturing industry very competitive with a pipeline funded by a $1.2 billion Chinese loan.  This is expected to be completed by December 2014. It will enable Tanzania to double its power generation capacity to 3,000 MW.

tanzania

Minister for Minerals and Energy Prof. Sospeter and the Chinese Ambassador, Lu-Youging Inspecting the ongoing construction of pipelines to transport natural gas from Mtwara to Dar es Salaam.

That alone will automatically make Kenya lose its edge as an East Africa favourable place to manufacture goods. A good example for this is illustrated in the deals which both Kenya and Tanzania secured when Japan’s Economy, Trade and Industry Minister Toshimitsu Motegi visited them in Agust 2013. The minister chose Tanzania as a destination where Japan manufacturers will set up more production facilities with the aim to make Tanzania a Japan’s manufacturing hub in Africa.

These dynamics of growth of Tanzania manufacturing industry doesn’t end here. Currently Tanzania Investment Centre has recorded more than 50 manufacturing projects in Mtwara only. That excludes the Dangote’s $500m Mtwara cement factory, which is described as the largest in Sub Saharan Africa and will have the capacity to produce about three million metric tonnes of cement annually.

Tourism competition 

For Tanzania, Travel and tourism industry is one of the biggest and fastest growing industries with more than 1 million tourists visiting annually and spending more per visit compared to Kenya. As a result, Tanzania is improving and increasing the number of accommodation facilities and its infrastructure.  This is giving Kenya a headache as it is forced to see the reality of decreasing market share. That explains the proposal of the so called “the coalition of willing” to introduce the East Africa tourist visa, which is not beneficial for Tanzania.

Why East Africa tourist Visa is not good for Tanzania?

For many years Kenya has used Tanzania tourist destinations to make its tourism package more marketable. However, since early 2000 Tanzania has invested heavily to try to differentiate its tourism destination from that of Kenya, which has proven a success and contributed to the 1 million tourists mark. Looking ahead Tanzania tourism market differentiation is more important than anything because it is what informs choices of its tourist who come to Tanzania. Thus the joint tourist visa will work against differentiation strategy.

Therefore all of the initiatives Kenya is coming up with under the so called “the coalition of willing” is more about protecting its economic interests and can easily be achieved under a coalition with Uganda and Rwanda because they are not Kenya competitors in ports or in tourism.

The future of the East African Community

Tanzania is a very mature country in geopolitics, and it has a wealth of experience in regional politics. It also has a sufficient environment necessary to take over Kenya as the largest economy in East Africa. That is why, It remains confident that once Kenya properly secures all the two main deals mentioned in this article (port and tourist visa), it will feel relieved and it will insert its diplomatic sense and East African community business will go back to normalcy.

As for Tanzania and Rwanda tense relations this has very little capacity to shift the East African Community dynamics because the competition between Tanzania and Kenya will improve services and give Rwanda a choice to pick who will deliver cheaper to her market and as for now Mombasa can seem a winner but come to 2017 when Bagamoyo port finishes the market will decide.

 

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