UG-KE oil fight is a premature baby. The big one is coming

Kenya has lost $200 million worth of exports to Uganda, its largest regional market, since October 2023, media reports proclaimed, based on the latest data. The news came amidst warnings that Kenya could lose even more in the times ahead, as the scuffle between the two countries over oil imports escalates.

 Last week, Uganda announced that it was moving to Tanzania for petroleum product imports after reaching a dead end in its bid to have the national oil marketer, Uganda National Oil Corporation (UNOC), registered in Kenya to enable it to bring fuel products through Mombasa port. Uganda’s view is that the previous system of buying from Kenyan fuel companies was extortionate, as greedy middlemen were jacking up the price and fleecing it.

 The tussle over oil imports is a limited and accidental geo-economic episode but, to steal the words of former South African president Thabo Mbeki,  it has still “all been panels of the set on the natural stage on which we act out the [geopolitical] deeds of the theatre of our day.”

 As we have reported before, two broad magnetic forces are contending to reshape Greater East Africa; a triangle that starts from Eritrea in the Horn of Africa, down to Mozambique along the Indian Ocean coast, up to Matadi Port, in the Democratic Republic of Congo’s narrow coastal strip with the Atlantic Ocean.

 One is a prosperity sphere driven by a northern drift from Kenya, with one shoulder being the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor and the Standard Gauge Railway from Mombasa, into Uganda, and the central African hinterland, with a branch off to South Sudan. On its northern shoulder, an agricultural revolution in Ethiopia’s northern highlands.

 The other is a southern drift anchored in Tanzania – the bulking of its ports and a railway into central Africa and the revival of the Tanzania-Zambia Railway (TAZARA) - cutting through Uganda to southern DRC, Rwanda and Burundi, and looping through Mozambique.

 The southern wave has done well, kickstarted a few years ago when Tanzania finally paved all of the nearly 1,200 kilometres of road from Dar es Salaam to Mwanza – and Ugandan electricity extended to northern Tanzania. Unsung in the rest of East Africa, the impact was dramatic. When Uganda announced it was building its oil pipeline to the Tanzanian port of Tanga, it was a huge payday for the southern forces.

 Uganda, Burundi, and later Kenya, boosted the northern forces with their lead on the African Union peacekeeping mission in Somalia (AMISOM). However, LAPSSET stalled; the Standard Gauge Railway froze in the middle of Kenya; South Sudan, and more recently Ethiopia, went up in smoke.  But then most dramatically, Rwanda sent its troops to Mozambique’s Capo Delgado province to halt the advance of the Islamist rebels, in the furthest foray at that point by an East African Community military in over 40 years.

 Ironically, Kenyan businesses, especially banks, have also definitely pushed mostly toward the central African hinterland, splashing on DRC and Rwanda.

 As we speak, the Regional Rusumo Falls Hydroelectric Project (RRFHP), a joint development by Burundi, Rwanda, and Tanzania is about to formally come online in a major boost for the southern drift.

Located at Rusumo Falls on the Kagera River on the border between Rwanda and Tanzania, and near Burundi, it is the first purpose-built transnational project to come online in the post-1977 East African Community (EAC).

 In December, the African Development Bank (AfDB) approved $696.41 million for Burundi and Tanzania to start Phase II of the Joint Tanzania-Burundi-DR Congo Standard Gauge Railway (SGR) Project. The financing will construct 651 kilometres of the Tanzania-Burundi railway line.

More than 400 kilometres of the electric standard gauge railway project’s infrastructure has already been built in Tanzania from Dar es Salaam to Dodoma since the start of the first phase of the project. The rest of the section from Dodoma to Tabora is under construction.

A branch of the railway, the Isaka–Kigali Standard Gauge Railway is a planned line linking the town of Isaka in Tanzania to the Rwanda capital, Kigali.

 The Tanzania-Burundi railway is expected to be completed by late 2025. Since the Kenya-Uganda Railway entered Uganda, there has been no new land-based cross-border regular transport infrastructure built in East Africa in over 100 years.

 In Tanzania, the government announced that it had started to work on the construction of the Bagamoyo Port. When completed, Bagamoyo port would be the largest port in East Africa. When the Uganda–Tanzania crude oil pipeline is completed, the Southern forces will take home the trophy.

 There are major changes in the Kenyan economy away from brick and mortar, the subject of a future story. But even without the current flap over oil imports, that business was inevitably going almost wholly to Tanzania in the next 10 years. When the Kampala-Jinja Expressway is built, and the SGR extended, a new dynamic will come to the Northern Corridor. But it will be based on a whole new trade mix.

Mr Onyango-Obbo is a journalist, writer and curator of the “Wall of Great Africans”

Twitter@cobbo3