Alternative Investments 

10 Jul, 2021

Written by Eve Driver

UPDATE: Since the writing of this piece, we learned that ICBC pulled out of the Lamu coal-fired power project.

“It’s not that we don’t want development. We do. But what we want is sustainable development,” explains Raya Ahmed, board member of the grassroots coalition Save Lamu. Lamu, an idyllic archipelago on Kenya’s northern coast, narrowly avoided hosting a new coal plant slated to be built in 2019. 

If built, it would have degraded the archipelago’s marine ecosystem and its local fishing economy. 

The fishing community in the Lamu Country in Kenya that could possibly be affected if the proposed coal power plant construction pushes through. Photo © Monica Marura Mghanga

But after leading this campaign, which won a victory in the courts in 2019, the members behind the movement known as Save Lamu want to ensure that their resistance does block development in this critically under-resourced region in the future.  They now want to underscore that the region does want investment—just not a kind that upends their traditional culture and livelihoods.

In 2012, Kenya’s Federal government announced plans to build the coal plant, as well as a 32-berth commercial port and an international airport, in Lamu. These projects were part of a broader initiative called LAPSSET (Lamu Port, South Sudan, Ethiopia Transport) Corridor, whose aim is to “transform Kenya into a newly industrializing, middle-income country providing a high quality of life to all its citizens.” Ever since, Raya Ahmed and her community have been organizing to ensure that they share in reaping the rewards of the new infrastructure.

“Since independence, Lamu has been marginalized,” Ahmed continues. “We have not gotten any development from the government.” After close to 60 years, this is finally beginning to change. 

But what kind of “development” does the community of Lamu want to see? This is the question investors and politicians alike would do well to be asking, especially after such a powerful community resistance movement against the coal plant, that led to a successful legal challenge in Kenya’s High Court. 

The Industrial and Commercial Bank of China (ICBC), for instance, was planning to fund 60% of that project, amounting to $1.2 billion. Today, the plot of land cleared for it sits empty. Farmers previously located there have already been displaced, but the project is not slated to move forward any time soon. In its pleas to the African Development Bank, the ICBC, and other major funders of the coal plant to abort that project, the community invited the investors to pursue another project on that site instead—one that would not thwart their existing economies of fishing and tourism.

The one project that is underway is the commercial port. Three shipping berths have already been completed, with 29 to go. Kenya’s President Uhuru Kenyatta paid a visit on May 20th to announce its opening. While the coal plant’s projected impacts on the fishing economy inspired the community-led resistance, the commercial port is considered a welcome investment—under certain conditions.

“If it’s done in the right way, the port would benefit us,” says Khadija Shekuwe, Coordinator of Save Lamu. The coalition has pushed for two key stipulations. First, that the farmers and fishermen displaced by the port’s construction be justly compensated for their losses. Second, that substantial numbers of the local community be employed—even if that requires funding scholarships to train people in the skills they would need.

Thus far, the government has agreed to both measures, but there remains tension about the number of scholarships and the amount of compensation on offer.

“The government promised to fund 1,000 scholarships. 200 per year for five years. But they only did two years,” Shekuwe laments.

The size and timeline of the compensation also remain caught in a heated debate. The government has offered to allot each fisherman 20,000 Kenyas shillings, equivalent to $200. 

Given that fishing close to shore around the archipelago will not be viable once the port is operative, most fishermen face two options: they can use the compensation to purchase a bigger boat to go out on the deep sea, or they can use it to invest in land or livestock and pursue farming instead. Save Lamu is concerned that the compensation is not sufficient to fund either path.

“20,000 shillings is not enough to do anything,” says Shekuwe.

As for the farmers compensated for relocating from the land nearby, another key issue has arisen as compensation has been disbursed: The men are the ones receiving the funds in their bank accounts, but many of them are immediately heading off to go shopping in Mombasa or even seeking additional wives, says Ahmed, leaving the women and children behind with neither land nor money to sustain themselves. 

“The disbursement has to happen in a way that benefits women equally,” she stresses.

In addition to advocating for employment and compensation for the port, the community has plenty of ideas for alternative investments that banks like the ICBC and the African Development Bank might consider instead of coal.

Many members of the community want to double down on the existing industries of fishing and tourism.

Somo M. Somo, fisherman and board member of Save Lamu, advocates for a factory that would enable locals to benefit from value addition within the fishing economy. 

Today, local fishermen sell their catches off to fish dealers—who are increasingly Chinese—and miss out on many of the profits the fish industry sees from processing and exporting.

“We can do the processing, filleting, and tinning,” he says. “That happens right now in Mombasa, but it could happen in Lamu.”

In addition, Somo was supportive of the international airport that the LAPSSET project intends to implement down the line. He himself is investing in a hotel and would like to see others do the same. He reasons that if tourists could fly directly into Lamu, rather than having to route through Nairobi, they might come more often. 

Meanwhile, “There are only two companies doing boat building,” Shekuwe says. “This is also an opportunity.” Rather than people buying boats outside of Lamu, she suggests that these companies expand and begin exporting.

“We have ten, eleven, twelve months of sun,” she adds, in a push for solar energy. Indeed, Somo remembers that when he met with officials at the Chinese embassy to oppose the coal project, “They said they have big panels for solar, and they are ready with solar alternatives,” but there was no follow-up discussion.

In 2017, Kenwind Holdings explored the possibility of developing a wind project in Lamu. They had even gone so far as to select a location, Somo said, but when the government and the company failed to agree on the price of the land, they decided to shift to Tanzania.

For more ideas, Lamu can look to its eastern neighbor, the Seychelles. 

Like Lamu, the Seychelles’ primary industries are tourism and fishing, which both depend on preserving the islands’ vibrant marine ecosystems. Facing pollution, coral bleaching, and plummeting fish populations, the Seychelles reached out to the Nature Conservancy in 2012, asking about its “debt for nature” swap program. By 2016, the U.S.-based nonprofit had finalized a deal—refinancing $21 million worth of the nation’s debt in exchange for government-led coral restoration, trash cleanup, and enforcing zones where fishing and drilling are off-limits. The initiatives could all be funded by the savings from the reduced-interest loans. The island nation followed through, meeting every payment and has successfully conserved a diverse marine environment the size of Germany.

Kenya happens to be heavily indebted to China. The coal plant would have racked this debt up even further. Done right, this ‘blue bond’ model could offer Kenya the chance to both reduce its debt and conserve Lamu’s delicate ecosystem at the same time—precisely the opposite of what the coal project would have brought about.

The Seychelles have become a testing ground for these blue bond models; in 2018, the World Bank launched a ‘sovereign blue bond’ program in partnership with international investors Calvert Impact Capital, Nuveen, and Prudential Financial. Amounting to a new loan worth $15 million, rather than a restructured debt, the financial instrument works a bit differently—but ultimately gives the island access to the capital it needs to rebuild its economy and its ecosystem.

“We were trying to help them preserve their natural water resources because that is an investment that will pay off for them down the road across all of their industries,” said Anna Mabrey of Calvert Impact Capital.

Ecosystems like Lamu’s and the Seychelles’ are a priority for conservationists because mangroves—trees that grow in shallow ocean water in both regions—are especially effective carbon storage.

With such a wide variety of natural resources at its disposal, the community members I spoke to are well and truly open to development—but only if it makes use of rather than destroys their community, their natural resources and their cultural heritage. 

“We hear other countries, developed countries, now they avoid coal — why would we in Africa now start to implement it?” Somo has been asking this question since 2012, and he has yet to get an answer.

About the author:

Eve Driver, United States/Kenya 

Eve is a writer living in Nairobi. She grew up in the northeastern United States and has had stints in Buenos Aires and Cape Town, where she also worked as a writer and researcher. In addition to her work as a journalist, Eve has worked as a fossil fuel divestment activist, a research assistant to an anthropologist, a criminal investigator for a public defender, and a campaign manager for an Argentine mayoral candidate.

She studied the history and culture(s) of environmentalism at Harvard University, where she graduated Phi Beta Kappa in 2020. Her research on media coverage of Cape Town’s “Day Zero” water crisis won the Undergraduate Essay Prize from the Science, Technology and Society department at Harvard’s Kennedy School of Government.

This story was made possible through the support of Climate Tracker.