Lapsset CEO warns high fuel prices and outdated logistics threaten Kenya regional trade goals

The Lamu Port South Sudan Ethiopia Transport corridor is more than a construction project made of steel and concrete, according to Martin Ngunga, the Chief Executive Officer of Afri Fund Capital. Speaking on the current state of regional logistics, Ngunga noted that Kenya is currently navigating an expensive contradiction. While the nation aims to establish itself as a regional trade powerhouse, it continues to move goods using methods reminiscent of 1998, while facing the reality of 2026 fuel prices.

The Lapsset corridor is designed to serve as a regional economic rewire for Kenya, Ethiopia, and South Sudan. The primary objective is to open new growth zones and reduce the distance penalty that currently makes African trade prohibitively expensive. Ngunga argues that the project should not be viewed solely as a Northern Kenya initiative, but as a national opportunity to rebalance development and strengthen the competitiveness of the entire region.

To achieve this, the focus must shift toward creating an integrated logistics spine. This involves moving beyond the mere construction of links, such as roads and bridges, to building comprehensive logistics hubs. For the Lapsset vision to become a reality, the infrastructure must connect ports, railways, and highways to inland container depots, dry ports, and specialized logistics parks.

The potential benefits of a fully functional corridor include a lower cost per tonne-kilometer, particularly when rail and sea transport handle the primary freight volume. Faster and more predictable delivery times, alongside reduced cargo handling losses, are expected to improve access for landlocked and frontier markets. Ngunga emphasized that the project is not just about moving containers; it is about moving value in the form of manufactured goods, processed foods, textiles, and technology services.

Current developments at the Lamu Port indicate progress toward these goals. The port is planned for 23 berths, with three currently operational. This facility is designed to handle over 20 million tonnes of cargo annually at full development. Recent operational milestones include the simultaneous offloading of three cargo ships, a development that signals the port's growing role in international trade networks.

The integration of Special Economic Zones and industrial clusters along the corridor is essential to scaling value chains. Kenya requires a combination of road, rail, air, and sea transport to make multimodal logistics a reality. This includes the development of cold chain infrastructure, which is vital for food security and the export of perishable goods.

Funding remains a critical factor in the completion of the corridor. As public budgets face increasing pressure, the role of private capital has become more prominent. Estimates suggest that the total development of the integrated corridor, including renewable energy and water strategies, requires significant investment. The Horizon Consortium has previously submitted proposals to develop five new berths at Lamu Port and the associated railway network connecting to Juba and Addis Ababa.

The project also faces practical challenges on the ground. Land acquisition along the corridor is a complex and expensive process, with compensation delays often slowing the pace of construction. Additionally, maintaining security in areas like the Boni enclave has required a sustained multi-agency presence to ensure contractor confidence and the steady progress of work.

Despite these hurdles, the Lapsset corridor remains a cornerstone of the Vision 2030 strategy. If implemented with discipline, it offers an alternative and complementary route for regional trade flows, easing the pressure on the congested northern corridor and the Port of Mombasa. The goal is to ensure Kenya can deliver goods faster and cheaper across borders, securing its place in the African Continental Free Trade Area.