Lamu oil refinery: Govt holds a stake, but what do the people own?

Kenya is set to commence construction on the Ksh2.2 trillion Lamu oil refinery on September 30, touted as a significant industrial venture expected to generate jobs, enhance fuel security, and position Lamu as an emerging energy center. However, a critical question remains unanswered: what share of ownership will the local community of Lamu have in the project?

Aliko Dangote's conglomerate is spearheading the construction, with Kenya receiving a 10% equity stake valued at approximately Ksh64.7 billion. Rwanda and Ethiopia have also been granted a stake, contributing to the proposed 30% regional ownership. Nonetheless, the community's stake has not been explicitly disclosed. This equity gap is significant, as Lamu residents not only offer the land and coastline but are integral to the refinery's operations.

The county's leaders and community organizations have expressed their concerns over their involvement in the negotiations and are demanding a binding agreement that addresses employment, profit-sharing, and development. The local leaders have urged for a formal contract with Dangote, encompassing employment quotas, a share of the refinery's profits, and specific development initiatives.

Other residents have emphasized the need for increased public involvement and transparency concerning environmental assessments. While the government highlights the project's potential for creating over 50,000 jobs, President William Ruto has tied the initiative to industrialization and reduced reliance on imported petroleum. These benefits, however, do not individually address the query of how much value will stay within the Lamu community.

The ownership issue is, therefore, inescapable. The government's ability to secure an equity position reportedly worth Ksh64.7 billion raises the question of what economic mechanism will ensure that the Lamu residents also reap enduring benefits from the project. This does not necessarily entail granting them shares in the refinery.

Instead, a community benefit agreement could serve as an alternative route. This agreement could delineate transparent local employment targets, procurement prospects for local businesses, scholarships and skill development funds, infrastructure commitments, and environmental safeguards, all legally and commercially feasible. The core principle is simple: the community hosting a multitrillion-shilling industrial project should not be left to negotiate for jobs alone once investment decisions have been finalized.

For Lamu, the success of the refinery will not merely hinge on its construction. It will also be determined by whether the project fosters robust local businesses, skilled workers, infrastructure improvements, environmental protections, and a clearly defined economic advantage for the people whose land and community will house it.

The multitrillion-shilling investment should yield more than mere national headlines and employment promises; for Lamu, the enduring question is whether the refinery will foster development as much as it alters the coastline.