The four quadrants: From photo-ops to realities of Dangote oil refinery project

President William Ruto and Aliko Dangote during the groundbreaking of the Dangote East Africa Petroleum Refinery in Lamu . [PCS]

The cameras are gone, the handshakes are done and the visitors have departed. And now that the dust has settled, it is time to transition from the euphoria of a State launch to the unforgiving brass tacks of real-world execution. We have imbibed the soaring rhetoric of our overdue economic emancipation, and the heavy-duty excavators we goggled at are ready to be deployed.  Or maybe not, given we have a court challenge that paused the commencement of real work.

We are, of course, talking about last Tuesday’s groundbreaking ceremony for the Dangote East Africa Petroleum Refinery and Petrochemical Special Economic Zone, as it is formally titled. Since that event, public and media spaces have erupted into intense debate, or maybe a dialogue of the deaf. On one hand, it sounds like we agree that we need this project. On the other, it looks like we disagree on the needs the project serves, include whose needs.  Welcome to our communication twilight zone, where government talks at, not to, a people who talk right back!

Examining this post-launch cacophony more carefully, you might see that project success depends not on what we hear on podiums, but how well the good, bad and ugly of multiple interests are managed. Let’s pursue a thought experiment that frames these interests into a 2-by-2 (four-quadrant) matrix of competing forces balancing their strategic value (in macro or geo-political importance) against the intensity of operational friction (the ease, or not, of getting stuff done).

We will preface this matrix with two uncomfortable perspectives. First, the unstated view by some that this refinery complex is either a tax-payer or debt-funded government project (because there is no such thing as a government-funded project without taxes or debt), or a standard Public-Private Partnership (PPP). Strictly, it is neither, this is Foreign Direct Investment (FDI).  The bulk of this Sh2 trillion-odd investment is private risk capital (equity or debt) to which the government has been invited to take up a minority equity stake, as have our regional neighbours. 

To be clear, this is a straight-up investment, not a BOT, BLT, DBFOT or other PPP concession.

Importantly, whether or not the government’s equity contribution comes through public land or the National Infrastructure Fund, Dangote is still the pilot, the state simply has a front-row seat. But this is low-trust Kenya, and the public views this Kenya Kwanza regime with a particular pinch of salt. So now we have calls to disclose the project’s local corporate identity and shareholders.

Which leads us into a second rabbit hole where we love to equate the economy and the government, leading some to demand that a private investor must justify or defend his corporate decisions (like this investment) preferably before Parliament or at least by public participation.

This stubbornly statist mindset dumbs down our economic discourse, and is arguably a key reason why we are in a debt trap; a reflection of tenderpreneurial proclivities which favour borrowing over investment; since public procurement is lucrative “mali ya umma”, but private buying isn’t.

Strictly, Parliament’s oversight role is restricted to government’s specific equity contribution, not the entire investment. But they can hold the Executive to account on investment decisions, including investor due diligence or issues like environmental safeguards or land compensation.

And they already oversight national policy and planning.  Being generous, we may call this private capital-led economic investment a national project, but not a government project.  The important twist here is it’s the government – as the custodian of the public interest and the market regulator – who must answer the hard economic and governance questions, not the private investor.

Sadly, the ongoing noise we hear eschews good clarification in favour of ugly confrontation.  Unfortunately, much of this noise has narrowed down to a heated conflict-of-interest exchange.

Which brings us back to the “value vs friction” matrix that should really be occupying our minds.

Let’s begin with the first quadrant of our post-launch landscape: The Anchor. Given the structural reality described earlier, this is the commercial and technical foundation that will move forward cleanly, driven by corporate efficiency not government bureaucracy. This quadrant represents The Good, the high value, low friction space in which a 40-month completion timeline has been set, and management and services contracts are running.  This is where Kenya expects to reap massive multiplier effects,; the space where government must keep away from operations, while insulating the project from bureaucratic interference and political nonsense.

From this point onwards, it gets complicated, beginning with the second quadrant: The Trap.  This is the high value, high friction space representing The Ugly where geopolitics comes to the fore in two ways. First, the structural skepticism of global institutions such as Bretton Woods pushing for a rapid green transition on a continent that still lacks a basic energy baseline while casting a sharp lens on ideas such as government equity stakes in projects such as this Lamu one,  the effect of which is to strengthen our Global South partnerships as new financing sources. 

Second, a regional scenario game of “truth or dare”. Partly, the huge potential across an eight-nation regional bloc ranging from trading potential to reduced import bills and a diminished dollar drain.  Partly, the crude oil sourcing question, although there are indications that this sourcing need not be local or regional but will likely also be international.  Partly, the Tanga standoff, because that’s where we are right now with advanced plans for their own regional energy hub. If quadrant one was about government being hands-off, dealing with this quadrant is a fully hands-on demand, a call for aggressive regional economic diplomacy that is preferably legally binding as a protection from, say, the risk of underwriting the region’s offtake and investment liabilities.

When we climb down from the global and regional stage to the local one, we enter our third quadrant: The Bottleneck. Here, the low value (low macro, high micro), high friction reflects testing project challenges around land tenure vulnerabilities, local property rights and top-down executive inattention. It is The Bad that makes the news, the arena in which politics is easily weaponized and the site for next week’s court case. It is not the place for tone-deaf threats or executive fiat in defiance of court orders unless somebody is looking to foment social unrest.

Paradoxically, this is also the quadrant in which the greatest local transformation could happen – from secondary manufacturing to ancillary services.  But it needs government mediation and action that is objective, transparent and fair, and where appropriate, compensation that is lasting.

Which brings us full circle to the fourth and final quadrant: The Vacuum. Think of this as our second layer of The Bad, the low value (low macro, high micro), low friction (easy to fix) quadrant that captures the project communication void across government that seems to have conflated privacy and secrecy.  And it’s not just about a gap that effectively treats a shared vision as a state secret (hence the excessive innuendo referred to earlier), it’s also about suppressing micro-economic spillover by keeping the local community (and the nation) in the dark on opportunities.  To demand radical transparency from the government to fix this is the ultimate “no-brainer”.

Where do we go from here? Few will argue against our industrial dream, so get the anchor rolling at full speed to optimize the good. Put some high-quality time and effort into regional economic diplomacy to proactively fix the ugly. Act swiftly and fairly to address land and other bottlenecks, and for the umpteenth time, embrace transparency and please talk to us, not at us.

As said twice before, this is a game-changer.  Now it’s up to government to also change its game!