Lamu oil refinery: Have African investors finally come of age?

An aerial view of the proposed Dangote fuel refinery plant, near the Lamu port with three operational berths at Magongo, in Lamu West Mainland, Lamu County. [Courtesy]

We are fascinated and may be mesmerised by the value of the proposed Lamu refinery, Sh 2.2 trillion.  It is curious how "T" has now replaced "B" as Kenya’s currency.

This perhaps reflects Kenya’s new ambitions or boldness.  Let us now focus on the person behind the project, Aliko Dangote. Why does he matter?

In most cases, investors from either the East or West drive such huge projects. We have believed others can do it, not us.

Dangote is showing it can be done, especially with the host government's support. Do you recall Kenyans demanding that foreign small-scale traders leave that space for us?

We are at home with big investors like Aliko Dangote. Is that a contradiction?

The “we can do it” is the missing link in our economic psyche.  It starts in childhood when we buy toys for our children instead of letting them make them.

We made our toys and had our first encounter with “we can do it!” It has proved useful in our lives.

Later, we learnt imports are better, including our names. With imports, why try making anything new? All you need is money by whatever means.

This refinery, once complete, will be a testament to “we can do it"! And the spirit seems even deeper in Nigeria.

Didn’t they buy a few of our banks? They are making headlines for good reasons. They even co- supervised my PhD thesis in the Deep South.  

As our in-laws, from the office on the hill to other families, we should find it easy to learn from them.

The Lamu project has a historical anchor.

Panafricanism has been in the air for almost a century. Remember Nkrumah, Nyerere, Jomo Kenyatta, Marcus Garvey, Booker T Washington and WEB Dubois among others?

Dangote has given Panafricanism an economic lifetime. Pan-africanists thought that with political freedom, economic prosperity would follow. Evidence seems to suggest otherwise.

The original pan-Africanists would have done much better had they taken Dangote's route and built an economic foundation.

The success of the European Union is based on its focus on economics, not just politics. Remember, economics is a universal language, spoken and understood by all. Noted how easily the affluent “forget” tribalism?

Interestingly, Britons had a pan-Africanist dream too. Remember Cecil Rhodes' dream of British dominating Cape to Cairo? Are the multinational firms operating across Africa also pan-Africanists?

We need more Dangotes, more believers in “we can do it"! And in every sector, including Artificial Intelligence (AI).

The new status symbol in the US is owning an AI model. When are we getting a homegrown (African) LLM like ChatGPT or Claude?

Could Dangote pioneer in that? Was Shakira right in 2010 with Waka Waka (this time for Africa)?

Before we leave Dangote, let’s not forget that wealth should be transferable across generations.

We should spend more time focusing on the virtuous cycle of wealth, not the vicious cycle of poverty. Dangote’s family background seems to confirm that the virtuous cycle of wealth is possible.

Can we stop the fights over wealth created by the deceased? And when will Kenyan entrepreneurs be celebrated like Dangote, either at home or across the borders?

The refinery matters in another, more important way: its funding. We are used to debt funding for such big projects.

Dangote has shifted to equity funding; we shall buy shares in the refinery, raise capital from local sources and become co-owners.

Did I hear someone say we need full disclosure on the refinery ownership as we buy the shares?

There is a widely held belief that there is no money in Africa.

Will the refinery prove us wrong? Do you recall bonds and shares being oversubscribed in Kenya? Pesa iko (money is there)!

What is missing is viable projects to invest in and trusted investors. Have you noted how we are losing money to investment frauds?

There is enough money to fund many projects in Kenya. But we have a trust deficit. Many citizens don’t trust their leaders with money, including chama (investment group) leaders. We also want quick returns, yet investment is long-term. Who thought Safaricom shares would hit Sh30 from Sh5 during the Initial Public Offering (IPO)?

What of the refinery itself? It will create jobs, spawn a manufacturing base in petrochemicals, logistics and supply chains that cross borders.

The value of real estate will also go up.  Think of Saudi Arabia’s ARAMCO, which employs 76,000 people and is valued at Sh1.67 trillion (Sh217 trillion).

Compare that with the proposed Lamu refinery. Think of the double benefits of the refinery: dividends as shareholders and jobs. It’s also possible that other industries will locate near Lamu to benefit from infrastructure and other amenities.

Lamu could be the nucleus of Kenya’s Industrial Revolution that would suck in Ethiopia, Sudan, Somalia and other East African countries.

When you add the exports of refined petroleum products and chemicals, the economic impact will be even bigger.

We hope chemical engineering and chemistry in general will get a new lease of life in our institutions of higher learning.

We shall celebrate the building of this refinery more if petrol and diesel prices fall and stimulate the economy.

We also must be cognizant of new realities like the shift to electric cars, climate change driven by fossil fuels and more focus on renewable energy sources. Oil is not forever. 

For now, it seems economic benefits far outweigh the environmental costs. Some argue that once we catch up with the West and East, we can worry about the environmental impact.

They argue that Africa is a small contributor to global warming and climatic change paradigm is too hell-bent on slowing our industrialisation. 

We know the global warmers. One other reality that makes this refinery so significant is that our economy is 55 per cent services.

Some rebalancing would be in order. The debate on the Lamu refinery is emotional, as I noted on TikTok. The debate even took a tribal angle.

One wishes each county gets an anchor industry like Lamu’s refinery. One wishes each county gets a Dangote. That would distribute jobs, make devolution work, and create a more vibrant economy with economic dividends for everyone.  If the private sector and public sector worked together like a pair of scissors, economic transformation would be easier. To Aliko Dangote, "Barka da zuwa, na gode sosai." Welcome and thank you in Hausa.