LAPSSET CORRIDOR PROGRAM REPUBLIC OF KENYA

PRELIMINARY MASTER PLAN FOR LAMU PORT CITY AND INVESTMENT FRAMEWORK
Building Better Outcomes

LAPSSET CORRIDOR DEVELOPMENT AUTHORITY

APRIL, 2017
PRELIMINARY MASTER PLAN FOR LAMU PORT CITY
AND INVESTMENT FRAMEWORK

Prepared by:
WS Atkins International Ltd, 30th Floor (N) Euston Tower, 286 Euston Road,
London, NW13AT.

Reviewed and Edited by:

Sylvester Kasuku; Augustine Masinde; Anne Mugo; Victor Nzue; Emily Ngongesa,
Kennedy Nyatwangi; Vincent Osewe; Erick Randu; Raymond Ogalo; Abdilatif
Hussein; Brian Obara; John Musale; Benson Thuita; Norman Muraya; Peris Kinyua;
Raphael Kimathi; Osman Mohamed; Moses Omondi; Frankline Otieno.

Lead Institutions:
LAPSSET Corridor Development Authority; Ministry of Transport, Infrastructure,
Housing and Urban Development; Ministry of Lands & Physical Planning; County
Government of Lamu.

ii
SPONSOR : United Kingdom Government
British High Commission
P.O. Box 30465-00100
Upper Hill Rd, Nairobi City, Kenya

CONSULTANT: WS Atkins International Ltd

30th Floor (N) Euston Tower,
286 Euston Road, London, NW13AT

CLIENT : LAPSSET Corridor Development Authority

Chester House Building
P.O.BOX 45008-00100
Koinange Street, Nairobi, Kenya

…………....……........................................................................…
Director General/CEO

Date.………….................…………...........................................…

COUNTY GOVERNMENT OF LAMU

P.O Box 74-80500
LAMU

……………....................................................................………....
County Secretary

Date...…...................................……………..…….…………….

iii
PLAN APPROVAL
I certify that the Plan has been prepared and published as per the requirements of the
Physical Planning Act Cap 286

………………………….............................................................................................
Physical Planning Officer

Date……………………..............................................................................................

MINISTRY OF LANDS AND PHYSICAL PLANNING

CERTIFIED

………………………….............................................................................................
Director of Physical Planning

Date…………………….................…….....................................................................

APPROVED
………………………….............................................................................................
Cabinet Secretary for Lands and Physical Planning

Date…………………….................…….....................................................................

APRROVED DEVELOPMENT PLAN No…………………………….................………........................

iv
FOREWORD
The Vision of the Ministry of Transport, Infrastructure, Housing and Urban Development is to be
global leader in provision of transport infrastructure, maritime economy, the built environment and
sustainable urban development. Lamu Port South- Sudan, Ethiopia Transport (LAPSSET) Corridor
Program is an integrated regional infrastructure program which is a critical component of Kenya
Vision 2030, broadly intended to enhance trade and logistics in the region by providing an alternative
and strategic corridor to serve the landlocked neighbouring countries of Ethiopia and South Sudan. It
is also intended to position Kenya a regional hub in trade and logistics service by providing the
country with a second transport corridor and port as well as provide a platform for opening up vast
regions of the country which have been under developed.

The purpose of Integrated Master Planning & Investment Framework for the Port City of Lamu is to
align stakeholders and unlock funding and delivery in order that there is a clear path to deliver the
socio-economic and environmental benefits linked to the LAPSSET Corridor Infrastructure project.

The Master Plan and Investment Framework provides a diagnostic of development issues,
infrastructure and urban development trends facing Lamu through identification of gaps and
opportunities. A range of diagnostic tools to explore the implications of planned proposals and future
opportunities was applied. The diagnostic was shaped and explored with relevant stakeholders leading
to development of a complete picture and alignment of stakeholders to recognize the potential
linkages between projects.

Through engagement with key stakeholders, a Planning Framework was developed in order to
provide an overarching strategy for Lamu. The plan identifies a number of projects and initiatives
that can build upon committed projects catalyse opportunities and manage potential impacts. This is
aimed to align action and unlock economic opportunities and deliver sustainable growth for Lamu
which is inclusive and contributes towards alleviating poverty and inequality.

The Integrated Lamu Planning and investment Framework serves as an exemplar approach which can
be scaled for the rest of the LAPSSET Corridor and be used to inform delivery of other large scale
infrastructure projects in Kenya.

James Macharia, EGH

CABINET SECRETARY
TRANSPORT, INFRASTRUCTURE, HOUSING AND URBAN DEVELOPMENT

v
PREFACE
Every present reality that we enjoy is a product of a great vision, from advanced transport and
infrastructure developments around us to efficient systems and services that cater for our needs. Lamu
County contains key LAPSSET Corridor infrastructure projects such as Lamu Port, pipelines,
Standard Gauge Railways, Highways, International Airports, Resort Cities, Crude and Product oil
Pipeline, Power and Energy Infrastructure, fibre optics among others. This position Lamu County as
a conducive Special Economic Zone ideal for Freight Logistic and Industrial hub, Information-
Communication and Technology park and a world class tourist and recreational Zone; driving forward
the Country's Vision 2030 Economic Pillar of a sustained economic growth.

Lamu County is endowed with vast natural resources ranging from Fish and Livestock, Minerals,
Wildlife, sandy beaches, Marine Ecosystem and conducive weather greatly contributing to the social
and economic livelihood of the County through crop production, livestock production, fisheries,
tourism and mining. These natural resources available together with capable human resource and the
envisioned Investment Infrastructure Development blended together, form the basic ingredients of
the Country’s economic growth by facilitating Kenya’s industrial development agenda.

The Integrated Planning and Investment Framework of Lamu Port city developed by the LAPSSET
Corridor Development Authority (LCDA) in partnership with WS Atkins International Ltd and
Howard Humphrey’s East Africa seeks to: Identify infrastructure and urban development gaps and
future needs of Lamu, give projections of the economic potential of the planned projects, Propose
complementary projects for investment in Lamu to enhance economic returns for the planned projects
and Identify key anchor projects for uptake by the private sector and enhances Private Sector entry
and collaboration with government agencies and on social and environmental management,
borrowing from world class best practices and standards.

The Master Plan and Investment Framework therefore provides a holistic view of the Lamu County
and pivotal details to guide the development in the short, medium and long-term.

Amb. Dr. Francis Muthaura, EGH

CHAIRMAN
LAPSSET CORRIDOR DEVELOPMENT AUTHORITY

vi
ACKNOWLEDGMENTS
The development of Lamu Master Planning and Investment Framework became successful due to
tireless efforts of various actors within the National Government County Government and Private
Entities. I wish to acknowledge roles and contributions of every individual and institutions that
contributed towards the preparation and completion of this Planning Initiative. My deep gratitude
goes to LAPSSET Corridor Development Authority (LCDA)’s Board and Staff in ensuring that the
Planning exercise was undertaken effectively.

My deepest gratitude further goes to the National Department of Physical Planning, County
Departments of Physical Planning in Lamu, Meru, Laikipia, Marsabit, Samburu and Baringo Counties
by contributing their planning expertise and time towards successful development of this Planning &
Investment Framework.

I wish to appreciate Government institutions such as the Ministry of Transport, Infrastructure,

Housing and Urban Development; Ministry of Lands & Physical Planning; Ministry of Energy &
Petroleum; Ministry of Tourism; Ministry of Environment & Natural Resources; Ministry of Water
& Irrigation, National Environment Management Authority (NEMA), Kenya Ports Authority (KPA),
Kenya National Highways Authority (KENHA), Kenya Airports Authority, Kenya Pipeline
Company, Kenya Railways Corporation, Kenya Investment Authority (KenInvest),National Land
Commission, Kenya Maritime Authority, Vision 2030,National Museum of Kenya among others. I
further extend my appreciation to the private sector institutions: REPCON Associates Ltd, World
Wildlife Fund (WWF), Centre for Urban & Regional Planning (CURP), WS Atkins International
Ltd and Howard Humphrey’s East Africa. I wish to recognize the Government of United Kingdom’s
support in realization of this Planning initiative.

I sincerely thank everyone who contributed directly or indirectly towards the development of this
Integrated Master Planning and Investment Framework of Lamu Port City.

Silvester Kasuku, MBS, CMILT

DIRECTOR GENERAL/CEO
LAPSSET CORRIDOR DEVELOPMENT AUTHORITY

vii
EXECUTIVE SUMMARY
Lamu Planning and Investment Framework is a guideline for implementation of LAPSSET Corridor
Program which is a regional flagship project, intended to provide transport and logistics infrastructure
aimed at creating seamless connectivity between the Eastern African Countries of Kenya, Ethiopia
and South Sudan. The Purpose is to align stakeholders around a shared vision for Lamu and to unlock
funding and delivery in order that there is a clear path to deliver the socio-economic and
environmental benefits linked to the LAPSSET Corridor project.

The vision of the Lamu Planning and Investment Framework is to ensure that Lamu node becomes a
gateway into Kenya and a hub for producing/exporting Kenyan products to the world through
inclusive development that provides new employment opportunities and a better quality of life.

The Objectives of Lamu Planning and Investment Framework include the following:

 Economy – Support the development of the port and surrounding special economic zone (SEZ)
so that Lamu can act as both a place where products are manufactured and as a hub for exporting
and importing goods,

-Transform the national, regional and local economy by putting in place the right infrastructure
and investment mechanisms to enable new economic sectors to thrive at Lamu.

 Social - Support communities in Lamu so that they can either continue with their existing
livelihood or gain new skills to access the many new job opportunities that development of Lamu
will offer,

-Develop the proposals for Lamu by fully engaging with the local community and other
stakeholders, so that Lamu is developed in an inclusive way.

 Environment – Protect Lamu’s natural assets including its marine and terrestrial habitats, its
wildlife and landscapes, whilst enabling managed access to these areas for the local community
and visitors to the area,

-Minimise impacts on the natural resources by developing urban areas in a green and compact
way that promotes mix uses, optimum use of land, public transport and liveability.

 Tourism – Establish and market Lamu as one of the major magnets for tourism in Kenya, by
diversifying and increasing the tourist offer, and protecting and enhancing the Lamu’s cultural
heritage.

 Security – Improve security in Lamu by improving the quality of life of existing residents and
designing in a way that promotes inclusion and incorporating appropriate security measures.

 Phasing – Take a phased approach to development so that the long term transformation of Lamu
is managed in a way that enables delivery.

viii
The Process of Developing the Planning and Investment Framework for Lamu City involved:
Diagnostic (Economic opportunities and Environmental & Cultural sensitivities defined),
Stakeholder engagement, Developing Framework (Stakeholders aligned around a shared vision and
overarching strategy for Lamu, Supporting infrastructure requirements defined, Priority actions and
projects identified that can build upon committed projects, catalyze opportunities and manage
potential impacts and Joint working arrangements with LAPSSET Corridor Development Authority
(LCDA) to strengthen capacities), Engagement, Finalize Planning & Investment Framework. Road
Map to support implantation is provided whereby Practical path to support next steps of
implementation outlined and Scale to other nodes on the LAPSSET Corridor.

The Lamu Planning and Investment Framework is phased into Initial Development, Medium Term
Development and Full Development. Phasing will be influenced by several factors such as:
Economic drivers and investor interest, Availability and supply of water for industrial,
commercial and residential; A vailability of power generation and distribution networks for
industrial, commercial and residential use; Workforce skills and capacity to take up
opportunities in Lamu; Security and safety factors which may restrain investment, tourism and
in-migration to take up employment.

The implementation of the Lamu Planning and Investment Framework will require a focus on four
priority projects that have been defined to catalyse investment. They include: Project 1 –Planning and
social management framework, Project 2 –Structuring the Special Economic Zone (SEZ), Project 3
–Power and water Infrastructure and Project 4 –Investment and promotion strategy. The aim is to
define further the technical scope of the individual projects, and define the components of the project
that would help scale up the approach and sphere of influence.

Lamu Planning and Investment Framework gives provision for Lamu SEZ Planning Authority
comprised of LAPSSET Corridor Development Authority (LCDA), National Environmental
Authority (NEMA), National Construction Authority (NCA), National Land Commission (NLC)
and County Government of Lamu. Support Staff from relevant Government Agencies will also
form part of the team. Mandates of the Lamu SEZ Planning Authority include: Plan Making,
Planning Approvals, Plan Monitoring and Planning Enforcement.

ix
 TABLE OF CONTENTS
PLAN APPROVAL............................................................................................................iv

FOREWORD ...................................................................................................................... v

PREFACE ...........................................................................................................................vi

ACKNOWLEDGMENTS ................................................................................................ vii

EXECUTIVE SUMMARY...............................................................................................viii

TABLE OF CONTENTS................................................................................................... x

LIST OF TABLES ............................................................................................................ xii

LIST OF FIGURES ..........................................................................................................xiii

LIST OF MAPS .................................................................................................................xiv

ACRONYMS AND ABBREVIATIONS ......................................................................... xv

1. INTRODUCTION .......................................................................................................... 1

Scope of this Infrastructure and Investment Framework ..................................................... 1

2. VISION FOR LAMU ..................................................................................................... 9

Introduction .......................................................................................................................... 9

Integration of the Investment Framework with other Plans ................................................. 9

Vision statement .................................................................................................................. 11

Objectives............................................................................................................................ 12

The Economic Vision and Assessing Economic Potential ................................................. 12

3. SITE ANALYSIS .......................................................................................................... 29

Introduction ......................................................................................................................... 29

Land use, ownership and settlements .................................................................................. 29

Environmental constraints and opportunities ...................................................................... 30

Summary of environmental policies and plans ................................................................... 30

x
4. INVESTMENT FRAMEWORK STRATEGY .......................................................... 36

Approach to developing the investment framework strategy ............................................. 36

What makes a successful city? ............................................................................................ 39

Preferred Planning Framework strategy ............................................................................. 42

Phasing ................................................................................................................................ 57

Establishing the Supporting Infrastructure Platform .......................................................... 63

5. IMPLEMENTATION .................................................................................................. 93

Introduction ......................................................................................................................... 93

Package #1 Planning and Social Management Framework ................................................ 93

Package # 2 - Structuring the Special Economic Zone ...................................................... 106

Package # 3 Power and Water Infrastructure ..................................................................... 117

Package #4 Investment and promotion .............................................................................. 121

Implementation Roadmap .................................................................................................. 127

xi
 LIST OF TABLES

Table 1: LAPSSET development corridor key infrastructure projects ................................ 5

Table 2: Key outcomes of the population-led scenario for the development of Lamu ....... 23

Table 3: Key outcomes of the project-led scenario for the development of Lamu ............. 24

Table 4: Assessment of relevant economic activities for Lamu ......................................... 25

Table 5: Physical requirements by priority industrial sector .............................................. 27

Table 6: Environmental constraints and opportunities ....................................................... 31

Map 4: Potentially developable areas ................................................................................. 37

What makes a successful city? ............................................................................................ 39

Table 7: Eco-City Features ................................................................................................. 40

Table 8: Comparison of Urban development models ......................................................... 42

Table 9: Full Development Phase ....................................................................................... 43

Table 10: Components of the Resort City and other Tourism Infrastructure ..................... 55

Table 11: Initial Development Phase .................................................................................. 59

Table 12: Medium Term Development Phase .................................................................... 61

Table 13: Indicative port terminal types and requirements................................................. 64

Table 14: Summary of pass through freight traffic demand (10,000 tonnes per year) ....... 69

Table 15: LAPSSET Railway - Key statistics .................................................................... 69

Table 16: Trips Generation estimates by phase .................................................................. 76

Table 17: Power demand estimates by phase...................................................................... 79

Table 18: Comparative costs by energy generation technology ......................................... 81

Table 19: Water demand estimates by phase ...................................................................... 88

Table 20: Waste water estimates by phase.......................................................................... 90

Table 21:Municipal Solid Waste Generation Estimates ..................................................... 91

xii
 LIST OF FIGURES

Figure 1: GDP forecasts for Kenya (KSh m, constant 2009 prices) ................................... 14

Figure 2: Comparison of selected sectors size contribution to total GDP and to GDP

growth, 2010-2015 ............................................................................................. 16

Figure 3: Foreign direct investment inflows to Kenya, 2002-2015 .................................... 18

Figure 4: Economic activity in Kenya and Lamu (% of population aged 5+) .................... 19

Figure 5: Power demands by sector and phase .................................................................. 79

xiii
 LIST OF MAPS

Map 1: Port Development Plan for Lamu LAPPSET node ................................................. 3

Map 2: The LAPSSET Transport Corridor .......................................................................... 4

Map 3: Environmental opportunities and constraints ......................................................... 34

Map 4: Potentially developable areas ................................................................................. 37

Map 5: Full Development Phase ......................................................................................... 53

Map 6: Initial Development Phase ...................................................................................... 60

Map 7: Medium Term Development Phase ........................................................................ 62

Map 8: Proposed transport and water infrastructure to support LAPSSET ........................ 75

xiv
 ACRONYMS AND ABBREVIATIONS

AGOA African Growth an Opportunity Act

ASAL Arid and Semi-Arid Land

BRT Bus Rapid Transit

CCECC China Civil Engineering Construction Corporation

CESAs Critically Environmentally Sensitive Areas

CSP County Spatial Plan

CWSB Coast Water Services Board

CURP Centre for Urban Regional Planning

EAC East African Community

EMCA Environmental Management and Coordination Act

FEED Front End Engineering Design

FDI Foreign Direct Investment

ICT Information & Communication Technology

IMF International Monetary Fund

IWPP Independent Power and Water Project

KIZAD Khalifa Industrial Zone Abu Dhabi

LRT Light Rail Transit

LCDA LAPSSET Corridor Development Authority

LCIDP Lamu County Integrated Development Plan

TARDA Tana & Athi River Development Authority

GASP German assisted Settlement Programmes

GDP Gross Domestic Product

KENHA Kenya National Highways Authority

KENINVEST Kenya Investment Authority

KNBS Kenya National Bureau of Statistics

xv
KPA Kenya Ports Authority

LAPSSET Lamu Port Southern Sudan-Ethiopia Transport

NCA National Construction Authority

NEMA National Environment Management Authority

NSP National Spatial Plan

PPP Public Private Partnership

SEZ Special Economic Zone

WWW World Wildlife Fund

xvi
1. INTRODUCTION
Atkins Acuity and Atkins Howard Humphreys East Africa working with LAPSSET Corridor
Development Authority (LCDA) and the project sponsor the British Foreign and Commonwealth
Office have developed an Investment Framework for Lamu. This document is structured as follows:

Section 1 – Introduction and understanding the context

Section 2 – Vision for Lamu

i) Integration with other plans
ii) Vision statement
iii) Objectives
iv) Economic Vision and assessing economic potential

Section 3 – Site Analysis

i) Site analysis and capacity assessment
ii) Land use and ownership
iii) Environmental constraints and opportunities

Section 4 – Investment Framework Strategy

i) What makes a successful city
ii) Preferred Planning Framework Strategy
iii) Phasing
iv) Establishing a supporting infrastructure platform

Section 5 – Implementation
i) Planning and Social Management Framework
ii) Structuring the Special Economic Zone
iii) Infrastructure - Water and Power
iv) Promotion and investment framework
v) Roadmap

Scope of this Infrastructure and Investment Framework

The Lamu Investment Framework is focused on the Lamu node within the LAPSSET corridor (see
map 1 below). The scope of this project is to establish a planning and investment framework for Lamu
to guide implementation of the LAPSSET Development Corridor. The Investment Framework aims

1
to align stakeholders around a shared vision for Lamu and to unlock funding and delivery in order
that there is a clear path to deliver the socio-economic and environmental benefits linked to the
LAPSSET Corridor project.

The Investment Framework includes the following:

An integrated vision and objectives for Lamu, including an economic vision for Lamu.
A framework plan - developed through engagement with key stakeholders in order to provide an
overarching strategy for Lamu (including identification of priorities, projects and exploration of
financing options). It defines high level requirements to accommodate future economic activities and
population growth including residential, industrial, commercial facilities, special economic zone and
tourism development opportunities.

A supporting infrastructure platform - Infrastructure needs and requirements are identified based upon
the projected population and proposed land uses. This includes preparation of high level requirements
for transport, water, drainage, power and solid waste management.
Priority projects - The plan defines a four priority projects and initiatives that can build upon
committed projects, catalyze opportunities and manage potential impacts.
Phasing and implementation - The framework provides a flexible and phased plan that can guide
public and private long term investment while generating maximum benefits for all.
The approaches and recommendations in this Investment Framework are applicable to other nodes in
the LAPSSET Development Corridor, however it is not within the scope of this project to provide
proposals for other nodes in the corridor.

2
Map 1: Port Development Plan for Lamu LAPPSET node

Understanding the context

The LAPSSET Corridor Program is Eastern Africa’s largest and most ambitious infrastructure project
bringing together Kenya, Ethiopia and South Sudan (see map 2 below).

3
Map 2: The LAPSSET Transport Corridor

The LAPSSET Corridor program is part of Kenya Vision 2030 Strategy, which is the long term
national development strategy which aims to transform Kenya into an industrialising, middle income
country providing a high quality of life to all its citizens by 2030 in a clean and secure environment.
The three key pillars of the Vision 2030 are: economic; social and political. LAPSSET corridor is an

4
important part of the economic pillar and will help the country achieve its economic growth
aspirations.

This mega project consists of seven key infrastructure projects as set out in Table 1: Lamu is a key
node on the LAPSSET development corridor, and will be a key focus for the infrastructure projects
identified in the table below. The development of the Lamu Port and the oil pipelines which will
terminate at Lamu will be key catalysts of development at Lamu. Development of a Special Economic
Zone and Resort City will generate significant employment and commercial opportunities for the
town and will help transform the town into a major new metropolis housing a substantial population.
To support this transformation international and interregional transport links will be improved
through a new railway, new and improved highways and an airport, and new power and water
infrastructure to meet the needs generated by industrial and residential users will be established.

Table 1: LAPSSET development corridor key infrastructure projects

Project Description of subcomponents Status
1. Port The project consists of 32 deep sea berths Supporting port infrastructure such as
at Manda Bay estimated to cost US $5 port headquarters (LAPSSET plaza),
Billion. Currently, three berths are being police station, power connection to
constructed by the Government of Kenya national grid and water network are
costing US $480 million, first berth will be completed, construction of port
ready in June 2018 and the other two in housing for management and security
December 2020. The other berths are is still ongoing. Dredging works
intended to be constructed and operated by started last year and are still ongoing.
the private sector. ESIA study for the port was
completed in 2014.
A study to explore the technical and
financial structuring of the Port is due
to commence in 2017.
2. Pipeline Oil pipelines will be financed and delivered Crude oil pipeline from Lokichar to
by private sector investment and consist of: Lamu along with tank storage and
Crude Oil Pipeline from Lokichar to Lamu loading facilities is under FEED
to Isiolo. (Front End Engineering Design).
In the longer term additional crude oil 53 ha of land have been reserved for
pipelines may be extended to link with
fields in South Sudan. oil tank storage and an oil refinery

5
 As end user demand grows in East Africa with a capacity of 125,000 bpd at
the opportunity exists to develop a refinery Lamu.
at Lamu along with product pipelines to
The refinery would comprises crude
serve Kenyan and Ethiopian markets.
Kenya and Ethiopia have signed bilateral and product tank farms, primary and
agreement for the development of a product secondary processing units,
oil pipeline. administrative service area and
construction yard.

3. Railway Inter-regional standard gauge railway lines Preliminary engineering and

from Lamu to Isiolo, Isiolo to Nakodok feasibility studies have been
(Kenya/South Sudan border) and Juba completed for Kenya-Ethiopia route.
(South Sudan), Isiolo to Moyale
(Kenya/Ethiopia border) and Addis Ababa
(Ethiopia), and Nairobi to Isiolo. Kenya
and Ethiopia have signed bilateral
agreement for developing the railway.
A feasibility study was completed in 2015
by CCECC. Costs for construction of
railway within Kenya along with
procurement of rolling stock are estimated
at US$ 12.9 billion including civil works,
tracks, rolling stock, signal and
telecommunications, buildings.
4. Highways LAPSSET aims to build inter-regional Detailed engineering designs for
highways connecting Lamu to Isiolo, Isiolo Lamu – Garissa – Isiolo (537 Km) are
to Nakodok and Juba (South Sudan), Isiolo completed.
to Moyale and to Addis Ababa (Ethiopia), The World Bank has approved a US$
and Lamu to Garsen (Kenya). Kenya has 500 million loan for the construction
agreed with the government of Ethiopia of Nakodok – Lokichar road (738
and South Sudan to develop these km). Construction has commenced.
highways under the LCDA. 505 km of road between Isiolo –
Total construction of highways within Marsabit – Moyale are completed.
Kenya is an estimated US$ 1.4 billion. Travel time between Moyale
(Kenya/Ethiopia border town) and
Nairobi has been reduced from about

6
 60 hours (more than three days) to 8
hours.
Construction of Lamu – Witu –
Garsen (112 KM) has been prioritised
for construction in order to connect
with existing road infrastructure.
Construction works are expected to
start early this year.
Sections within Ethiopia to the
Kenya border have also been
completed.
5. Airports International airports are proposed at Intermediary airports are under
Lamu, Isiolo and Turkana with an construction to build up air transport
estimated cost of US$ 188 million, US$ and logistic business case for
175 million and US$ 143 million international airports.
respectively. The Airport at Lamu and Preliminary facilities (2.3 km
Turkana need upgrading and a new Airport runaway and terminal building) at
Manda airport in Lamu have been
is proposed at Lamu. The Government of
completed. With plans for further
Kenya owns and is responsible for connections.
constructing and maintaining international 1 km runway in Isiolo airport is
airports, but it is suggested that passengers completed and terminal building is
also completed.
and cargo terminals should be constructed,
Work at Lake Turkana airport has not
owned and operated by private entities started yet.
under the PPP framework.

6. Resort City Three resort cities have been proposed at Preparation work for a master plan
Lamu, Isiolo and Lake Turkana with an for Lamu Resort city and Metropolis
estimated cost of about US$ 970 million, is underway.
US$ 200 million and US$ 42 million
respectively. Investment on these resort
cities are expected to come from private
funds under PPP framework.
Lamu Resort City will mainly comprise a
convention centre as the core facility,
amusement centre, terminal station, culture
centre and fisherman’s wharf as sister

7
 cities. Though initially they shall all be
interconnected via a road, it is planned that
in the long run they will be linked by the
more efficient study for LAPSSET.

7. Power and The multipurpose High Grand Falls Dam Further feasibility studies are
Water supply along the Tana River. required to develop and update
previous studies undertaken for this
project.

8
2. Vision for Lamu

Introduction

This section sets out the vision for Lamu Infrastructure and Investment Framework. The vision has
been agreed through stakeholder consultation and has been developed to be consistent with the aims
and objectives of national policy and to ensure that it can be incorporated into the County Spatial Plan
and other local level plans (Local Physical Development Plans and Urban Plans).

Integration of the Investment Framework with other Plans

The Lamu Investment Framework sits within a hierarchy of plans that guide development in Kenya
(see diagram below). The framework will help to achieve the aims of the strategy set out in the Kenya
Vision 2030, and is consistent with the strategies and guidelines set out in the National Spatial Plan.
The following provides a brief summary of the status and key aims of the various plans and strategies
that will impact on development at Lamu.

Kenya Vision 2030 – was prepared by the Government of Kenya. It covers the period 2008 – 2030
and sets out the long term development blueprint for the Country. The overall vision is to create a
globally competitive and prosperous nation with a high quality of life by 2030. This vision is based
on three pillars: economic - to maintain a sustained economic growth of 10% per annum over the next
25 years; social - a just and cohesive society enjoying equitable social development in a clean and
secure environment; political – an issue-based, people centred, result-oriented, and accountable
democratic politics. In driving forward the socio-economic development of the Country the vision

9
identifies various strategies that will need to be implemented, these strategies will be supported by a
series of flagship projects that includes LAPSSET.

The LAPSSET corridor is identified as a link between Lamu, Kenya’s North Eastern province,
Ethiopia and Southern Sudan. The project involves the development of a new transport corridor from
the new port at Lamu through Garissa, Isiolo, Mararal, Lodwar, and Lokichogio to branch at Isiolo to
Ethiopia and Southern Sudan. Projects within the corridor identified in Vision 2030 comprise: a new
road network, railway line, oil refinery at Lamu, oil pipeline, Lamu Airport and free port at Lamu
(Manda Bay) in addition to resort cities at the coast and in Isiolo and Turkana.

National Spatial Plan (NSP) - was prepared by the Department of Physical Planning in the Ministry
of Land and Physical Planning. It covers the period 2015 – 2045 and addresses land use, socio-
economic and environmental issues to achieve balanced and sustainable spatial development and
optimal land use across the country. The NSP provides comprehensive strategies and policy
guidelines to deal with issues of rural and urban development, modernizing agriculture, infrastructure,
energy production, mining and industry, and sustainable human settlements. It provides a spatial
framework for anchoring Vision 2030 flagship projects. The NSP envisions spatial development of
the Country to promote the achievement of competitiveness prosperity and high quality of life for
citizens in line with the aspirations of Vision 2030.

The NSP acknowledges the need for better distribution of urbanisation in Country. The LAPPSET
corridor (and its key components) are identified in the NSP and are crucial to spurring growth in
northern parts of the Country which will help with this re-distribution of urbanisation. As such the
NSP takes deliberate effort to direct infrastructure investments to towns in the LAPPSET corridor.
Lamu is identified as a gateway town, which needs to have its functionality and liveability enhanced
to make it more attractive and competitive. The NSP supports Lamu as an emerging growth area and
identifies several projects such as the development of the Special Economic Zone (SEZ) and the resort
city as critical to achieving this.

Lamu County Spatial Plan (CSP) – this is in the process of being prepared by the County
Government of Lamu. The CSP contains strategies and policies regarding the desired spatial form of
the County, it will cover the period 2017 – 2026. The vision in the draft plan sets out visions for each
of the wards in the County (Faza, Kiunga, Basuba, Hongwe, Mkunumbi, Hindi and Mkomani) it does
not provide a vision for the LAPSSET Lamu node. The draft plan does refer to the LAPSSET project,
identifying the different elements of the project such as the port, the corridor (for railway, pipeline

10
etc.), oil refinery, resort city, international airport, and port city. The CSP identifies that the Port City
will reach a population of 1.25 million by 2050.
The CSP does not include a plan showing the red line boundary of the area that is covered by the
LAPSSET projects. It is recommended that the final CSP should include a plan showing the area that
the project includes. It is also recommended that the CSP should have additional policies related to
LAPSSET Lamu node including:
Definition of a vision for Lamu node – using the vision in this Investment Framework.

Definition of the overall quantum and land use types within the Lamu node – using the quantum set
out in this Investment Framework.

A statement that further detailed planning requirements will be set out in a detailed masterplan and
development guidelines (to be prepared by LCDA and the County Government of Lamu).

Defining the extent of green buffer and defining appropriate uses such as managed recreational and
agricultural use that retain openness and restrict development to ancillary uses.

Lamu County Integrated Development Plan (LCIDP) – was prepared by the County Government
of Lamu. It covers the period 2013 – 2017. The LCIDP makes reference to LAPSSET and identifies
the components of the project in detail and identifies the benefits of the project to Lamu County. As
drafted the LCIDP and this Investment Framework are consistent and as such there do not appear to
be any issues with harmonisation that need to be resolved.

Integrated Lamu Metropolitan Area Structure Plan – The County Government of Lamu is in the
process of preparing this plan, and draft was published in 2016. The plan sets out a detailed land use
zoning plan for the port, industrial area and new metropolis. There are several key differences between
the detailed land use zoning proposed in the Integrated Metropolitan Area Structure Plan and land use
zoning in this Lamu Investment Framework. Before it is approved, the Integrated Lamu Metropolitan
Area Structure Plan will need to be amended to incorporate the land use zoning as set out in the Lamu
INVESTMENT FRAMEWORK, to ensure that the vision and objectives of the Investment
Framework are achieved.

Vision statement

The Lamu node will become a gateway into Kenya and a hub for producing and the exporting of
Kenyan products to the world through the development of a new port and international airport.
Lamu will be developed in a way that is inclusive so that it provides new employment opportunities
and a better quality of life for both the existing population of Lamu and the Kenyans who come to
make Lamu their new home.
11
In making the transition from the Lamu of today to the Lamu of tomorrow, the rich natural and cultural
heritage of the area will be protected and enhanced, through an approach to urbanisation that promotes
a compact and green city.

Objectives

In achieving the vision for Lamu the following objectives will need to be achieved:
Economy – Support the development of the port and surrounding special economic zone (SEZ) so
that Lamu can act as both a place where products are manufactured and as a hub for exporting and
importing goods.

Economy - Transform the national, regional and local economy by putting in place the right
infrastructure and investment mechanisms to enable new economic sectors to thrive at Lamu.

Social - Support communities in Lamu so that they can either continue with their existing livelihood
or gain new skills to access the many new job opportunities that development of Lamu will offer.

Social – Develop the proposals for Lamu by fully engaging with the local community and other
stakeholders, so that Lamu is developed in an inclusive way.

Environment – Protect Lamu’s natural assets including its marine and terrestrial habitats, its wildlife
and landscapes, whilst enabling managed access to these areas for the local community and visitors
to the area.

Environment – Minimise impacts on the natural resources by developing urban areas in a green and
compact way that promotes a mix of uses, efficient use of land, public transport and liveability.

Tourism – Establish Lamu as one of the major magnets for tourism in Kenya, by diversifying and
increasing the tourist offer, and protecting and enhancing the Lamu’s cultural heritage.

Security – Improve security in Lamu by improving the quality of life of existing residents and
designing in a way that promotes inclusion and incorporating appropriate security measures.

Phasing – Take a phased approach to development so that the long term transformation of Lamu is
managed in a way that enables delivery.

The Economic Vision and Assessing Economic Potential

The economic vision for Lamu is of a sustainable industrial economy that provides inclusive
economic opportunities locally, supports the achievement of Kenya’s economic development
strategies, and strengthens integration and economic development across East Africa. The creation of
a Special Economic Zone and a new metropolis at Lamu and the investment in major infrastructure
as part of the LAPSSET project will be the basis for achieving this vision.

12
This section presents a diagnostic review of the national and local economic context to inform the
economic vision for Lamu. It also provides an overview of the scenario methodology used to examine
the economic impact of proposals at Lamu.
National economic context

Economic and Social Objectives

Vision 2030 sets the goal of Kenya becoming a newly industrialising “middle-income country
providing a high quality of life to all its citizens by the year 2030.” Vision 2030 sets out an economic
development programme that covers all regions of Kenya and aims to deliver annual GDP growth of
10%.
A key route to achieving this goal is industrialisation of the Kenyan economy. The Industrial
Transformation Programme (2015) aims to increase the formal manufacturing sector’s share of GDP
to over 15%. The plan also supports expansion of skilled service sector activities.
Expansion of the industrial sector and commercialisation of other sectors, such as agriculture, will
create productive and high quality employment opportunities. This is imperative to address issues of
unemployment, particularly amongst the youth, and provide a path to prosperity for the people of
Kenya. The Second Medium Term Plan (MTPII) includes a long-term target of creating 1 million new
jobs annually. Industrialisation will also support formalisation of the Kenyan economy. Whilst
currently a significant majority of employment is in the informal sector (estimates suggest 83% 1),
Vision 2030 aims for formal sector employment to reach 40% of total employment.

The industrial development of Lamu around the port and other major infrastructure can provide
opportunities for the development of manufacturing and other industries. This will support the
economic development of an area that has historically experienced low levels of investment. Target
industries for Lamu should provide significant employment whilst building upon and adding value to
existing local activities (such as livestock farming and fishing), particularly in producing goods for
the export market.

Current conditions
Growth: Annual GDP growth (holding prices constant) in Kenya averaged 5.5% from 2010 to 2015.
The IMF’s World Economic Outlook 2016 predicts that GDP growth is set to rise in the period up to
2021, following significant infrastructure investment and strong performance of the manufacturing
sector supported by low oil prices. Figure 1 plots the GDP projections of the IMF and those contained
in the MTPII, as well as an extrapolation of GDP growth based on recent trends. This indicates the

1
KNBS. 2016. Economic Survey 2016

13
gap between historical performance and the economic potential. The IMF note that economic and
export diversification, supported by continued investment in infrastructure, will be critical for
realising growth in Kenya and other economies in the region.

Figure 1: GDP forecasts for Kenya (KSh m, constant 2009 prices)

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

IMF Vision 2030 MTPII Linear forecast

Key sectors and strategies: Currently, agriculture and manufacturing constitute the largest sectors in
Kenya, representing 30% and 10% of GDP respectively2. However, the two sectors only contributed
24% of total GDP growth between 2010 and 2015 (holding prices constant). Growth rates in both
sectors have been below the national growth rate, whilst growth in the services sectors has generally
been strong. This is demonstrated in Figure 2, which compares sectoral contribution to GDP in 2015
with contribution to total growth between 2010 and 2015. Those sectors below the 45° line are those
which have contributed less to growth in Kenya over the last five years than their significance to the
economy (as measured by share of GDP in 2015) would suggest.

Key manufacturing sub-sectors for growth include agro-processing (including livestock and fish),
textiles and apparel, leather and construction materials. The development of Special Economic Zones
is the flagship policy for supporting growth in the sector.

The principal strategies for agriculture are to increase the processing of products for export, thereby
adding value and creating agro-processing employment, and improving agricultural production, for
example through a Coastal Disease Free Zone for livestock and irrigation projects for the ASALs.
Mombasa has been proposed as an agro-processing hub, however a large proportion of the ASALs

2
KNBS. Economic Survey 2016.

14
are along the LAPSSET corridor. Lamu would therefore be a potential export hub for goods produced
along the corridor. Additionally, the development of a modern fishing port at Lamu features in the
Industrial Transformation Programme.

In the tourism sector, international arrivals and tourism earnings have fallen year on year since 2011,
due to the global downturn and perceptions of security in Kenya 3. Vision 2030 aims for Kenya to
become a top 10 long haul tourist destination. To achieve this goal, resort cities are being established
in Lamu, Lake Turkana and Isiolo. Other initiatives include improving the ecosystem management of
Kenya’s coastline and improve its parkland.

Oil, gas and minerals was introduced as a priority sector under MTPII, based on recent oil and gas
discoveries, including offshore gas in the Lamu basin. Kenya currently has inadequate infrastructure
and technical capacity to take advantage of these deposits. Lamu, as the end point of the oil pipeline
component of the LAPSSET corridor, could act as a centre for development of related industries, such
as petrochemicals, when these resources are fully developed.

The service sector, particularly ICT and financial services, has also become a key growth sector for
Kenya and Vision 2030 targets employment growth in these sectors. However, the sector and
strategies to support it currently centre on Nairobi, where the available skills and infrastructure are
currently present. This is therefore likely to be a less significant concern for Lamu, particularly in the
short term.

The development of Lamu is therefore principally an opportunity to accelerate growth rates in the
manufacturing and agricultural sectors and provide an opportunity to stimulate Kenya’s tourism
sector. Longer-term, there may also be the opportunity to develop petrochemicals and related sectors
as well as services as this becomes a more prominent component of the Kenyan economy.

3
KNBS. Economic Survey 2016.

15
Figure 2: Comparison of selected sectors size contribution to total GDP
and to GDP growth, 2010-2015

30%
Share of total GDP growth 2010-2015 (constant 2009

25%

20%

Agriculture, forestry &

prices)

fishing
15%

Wholesale & retail trade

10% Education
Financial & insurance services
Construction
Real estateManufacturing
5% Information &
Transport & storage
communication

0%
0% 5% 10% 15% 20% 25% 30%
Share of GDP (current prices) 2015

Source: KNBS Economic Survey 2016

Exports: Kenya’s principal exports are coffee and tea, horticultural products, mineral oils, vegetables
and articles of apparel and clothing. The Industrial Transformation Programme identifies further
development of agro-processing industries and light manufactured products such as apparel as key
sectors. Lamu can provide the required infrastructure and facilities to support export-oriented activity
in these sectors and diversification into sectors with similar skills and infrastructure requirements,
and thereby support a programme of export-led growth and diversification.

Employment: Formalisation of employment remains a significant challenge in Kenya. Estimates by

Kenya National Bureau of Statistics suggest that informal employment accounts for 83% of total
employment and that in recent years this proportion is increasing. Formal employment has the
potential for greater labour productivity, skills development and employment security. Creating
formal sector employment is therefore an important component of Kenya's economic and social
development programme.

Investment: Domestic and inward investment in Kenya has been increasing. Levels of gross fixed
capital formation have increased year on year from 2011 to 2015 though at variable rates, partly
driven by significant infrastructure investment. Foreign Direct Investment (FDI), as measured by the

16
IMF, has grown significantly since 2012, both in absolute value and as a proportion of GDP, as shown
in Figure 3.

Factors cited by international investors as supportive of investment in Kenya are domestic market
growth potential, the skill profile of the workforce, quality of infrastructure and access to other
markets. Barriers to investment include length of time required for registering property and work
permits and high costs of electricity connections4. UNCTAD have identified the reliability of the
power supply, tax administration and security as challenges for investors5. To attract investment,
development of an industrial zone in Lamu will have to address these issues by demonstrating
adequate investment in power infrastructure. Designation as a Special Economic Zone under the 2015
Special Economic Zones Act (see Box 1) should address issues regarding tax and business regulation.

Competitiveness: The World Economic Forum’s Global Competitiveness Index 2016-2017 ranks
Kenya 96th out of 138 economies, with an overall score of 3.9 out of 7. Influential factors are similar
to those relevant for inward investment. Within the components of the index, Kenya performs best on
‘Health and primary education’, ‘Labour market efficiency’; ‘Financial market development’, ‘Goods
market efficiency’ and ‘Business sophistication’ (all rated 4 or above). Kenya’s key weakness within
the index, and the only dimension against which it scores below 3.5 out of 7 is ‘Infrastructure’. Other
problematic factors for doing business include corruption, tax rates, access to financing, inefficient
government bureaucracy and inadequate supply of infrastructure. Within this context, the importance
and potential impact of the LAPSSET corridor investments and the benefits conferred by the Special
Economic Zone designation for enabling development at Lamu is clear.

4
KNBS. 2015. Foreign Investment Survey
5
UNCTAD. 2012. Investment Guide to Kenya.

17
Figure 3: Foreign direct investment inflows to Kenya, 2002-2015
1,600 2.5
1,400
2
1,200
USD millions

1,000 1.5

% GDP
800
600 1

400
0.5
200
- 0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Foreign direct investment, net inflows (BoP, current US$)

Foreign direct investment, net inflows (% of GDP)

Source: IMF World Economic Outlook 2016

Box 1: Special Economic Zones Act 2015

With the passing of the Special Economic Zones Act in 2015, areas can now be designated
Special Economic Zones (SEZs).
Various types of sites can be SEZs, including free trade zones, industrial parks, science and
tech parks, tourist and recreational/MICE zones, business service parks, and livestock zones.
SEZ designation confers benefits to enterprises located within the zone, such as exemptions
from the Excise Duty Act, Income Tax Act, EAC Community Customs Management Act, VAT
Act and stamp duty. SEZ enterprises are also entitled to work permits for up to 20% of their
full time
Local employees.
economic context
Demographics
The population of Lamu County in 2017 was estimated at 137,1806. 80% of the population live in
rural areas and most urban residents live in Lamu Town, which has a population of 21,994. The
population includes several minority ethnic groups, some of whom such as the Boni and Sanye engage
in traditional hunter-gatherer lifestyles. All ethnic groups and both rural and urban dwellers need to
be considered in the economic development model for Lamu.

As across Kenya, the population of Lamu is young. Estimates for 2017 suggest that the population of
working age (15-64) represent 56% of the population but those aged under 29 represent 69% of the
population. This young population represents a future opportunity for economic growth, as an
increasing proportion of the population will be of working age. To realise this opportunity, there is a

6
Lamu County Integrated Development Plan 2013-2017

18
need to ensure there are sufficient employment opportunities, that these are accessible to local people
and that they are in productive and well-paying jobs.
Employment
Data from the 2009 Population and Housing Census suggests rates of unemployment are lower in
Lamu than nationally, at 4% compared to 7%. This is true of both rural and urban populations. There
is no available data on the quality of employment however (for example, what proportion is in the
formal sector).

Economic inactivity is high amongst urban residents of Lamu, as demonstrated in Figure 4. 52% are
economically inactive, compared to 40% for urban residents nationally and 39% for the total national
population. The difference is most significant for female residents (67% are economically inactive
compared to 47% nationally). This may be related to cultural norms regarding women in employment.

Figure 4: Economic activity in Kenya and Lamu (% of population aged

5+)
60%

50%

40%

30%

20%

10%

0%
Employed Seeking Work Inactive

Kenya Lamu Total Lamu Urban

Source: KNBS Population and Housing Census 2009

The LCIDP estimates poverty rates of 45% in urban centres and 29% in rural areas, citing key reasons
as unemployment, subsistence economic lifestyles and lack of access to finance. This makes clear
that despite low measured levels of unemployment, poverty is widespread. Employment may be
poorly paid or provide insufficient hours of work. LAPSSET is identified by the LCIDP as an
opportunity to relieve poverty in the future.

19
Information on skills, proxied by data on educational attainment from the 2009 Census, suggests that
educational attainment is lower in Lamu County than the national average. A greater proportion of
people in Lamu have only a primary school education or less7. The LCIDP identifies that school
capacity is generally adequate, but secondary school performance and the state of local skills training
institutions is poor.

This suggests there is a need to create better quality and inclusive employment opportunities in Lamu.
Initially, many of these jobs will need to be accessible to those with low skills. Light manufacturing
can employ large numbers of low skilled workers whilst ensuring high labour productivity relative to
activities such as agriculture, reflected in higher levels of pay. Additionally, manufacturing
employment can provide skills to employees. In particular, this model of development has proved
successful in East Asia.

Local livelihoods
While there is no data on the sectoral distribution of economic activity in Lamu, the LCIDP notes that
the main economic activities in the county are:
Crop production, including cash crops. Projects outlined in the LCIDP to support farmers include
improving production techniques and promoting agro-processing, for example developing a fruit
processing plant.
Livestock production, particularly cattle. Providing adequate marketing facilities and supporting
medical programmes are projects identified in the LCIDP.

Fishing is the main economic activity for the residents of Lamu Island. Fishing activity is currently
below its potential due to inadequate equipment and facilities (e.g. landing sites and cold storage). In
particular, local fishermen are unable to undertake deep sea fishing.

Whilst the above represent major activities and sectors for employment, tourism is also an important
sector for the area, given its beaches, natural environment and fauna and the UNESCO World Heritage
status of Lamu Old Town. There are 2 classified and 181 unclassified hotels. The LCIDP identifies a
need for greater coordination and marketing of tourist activities. Mineral resources and industrial

7
77% of the Kenyan population aged 3 or above had their highest level of educational attainment as
primary school or lower, compared to 83% in Lamu. Nationally, 22% of people completed a
secondary, tertiary or university education, compared to 14% in Lamu.

20
development are proposed as potential future sectors for growth in the LCIDP, particularly developing
local industries for export, including food processing.
The industrial development of Lamu and the infrastructure projects along the LAPSSET corridor,
particularly the Lamu Port, provide a significant opportunity to develop these central activities further.
Food and beverage processing for export can support greater value added to agricultural and livestock
products whilst providing employment opportunities. Mineral resources, where viable, can be
commercially developed making use of the transport corridor for access to markets. The improvement
of transport infrastructure and the development of a Resort City can support the tourism sector in
Lamu.

Constraints on growth
The LCIDP also identifies infrastructure and utility constraints on development and economic growth.
Transport infrastructure is currently limited, for example roads are largely untarmacked. Access to
tapped water is only available in urban centres and there is limited access to modern sanitation
infrastructure. Electricity is provided using diesel generators to some areas of the county, though grid
connectivity is almost complete. Landlessness and land ownership issues are a significant concern in
the county. There is a risk of increased coastal flooding due to climate change. Additionally, the
environment of some areas of the county is becoming degraded through deforestation, water pollution
and depletion of key ecosystems such as mangroves. The development of Lamu will need to address
these issues to realise sustainable economic development.

Economic rationale of proposals for Lamu

Port: The development of a port at Lamu will allow for relief of the congested Port of Mombasa and
provide the opportunity to develop export-oriented manufacturing or agro-processing industries, or
those that make use of global value chains, in Lamu. The development of the Port can also support
export of oil following its transport to Lamu along the LAPSSET corridor. The development of
appropriate port facilities can also support a deep sea fishing industry.

Port Industrial Area: The Port Industrial Area will provide employment land and infrastructure
required to support industrial and agro-processing activity. These activities will add value to
agricultural and livestock products produced by communities along the LAPSSET corridor and of
fishing activity based around Lamu. Manufacturing activity in other sectors, for example construction
materials, will provide further employment opportunities. The activities contained within the Port
Industrial Area can support the aims of Vision 2030 regarding agriculture and manufacturing.
Proximity to the port will allow for the export of products, particularly heavy goods, and access to

21
imported inputs where these are required. Development of an industrial zone accommodating clusters
of activities will allow for agglomeration benefits – low transaction costs supporting linkages between
specialised firms and access to a shared labour market.

Resort City: The development of a Resort City can develop Lamu’s already strong tourist offer.
Current assets include the natural environment and cultural heritage, particularly the UNESCO World
Heritage Site of Lamu Old Town. In addition, development of the Port, Special Economic Zone and
Lamu Metropolis will increase demand from business tourism. There may also be a demand for short
term or long term lets either as second homes or from business people on long-term trips.

Special Economic Zone: The Special Economic Zone can provide an environment that attracts
investment in manufacturing and other industries including logistics and service related activity.

Airport: As demand for travel to the area increases, either for business or tourism purposes, the
current airport infrastructure may prove inadequate, requiring investment in upgrading of facilities to
allow further air connections and routes to serve Manda. A site has been reserved for a new
international airport to be developed in the future as demand develops.

Economic opportunities and future scenarios

To explore the economic potential of projects at Lamu projects, three scenarios were used: population-
led; project-led; and a benchmarking-led scenario.

Population led scenario

This scenario uses projections of the population of Lamu County, based on those contained within
the LCIDP, to estimate the required level of employment to support the future population of Lamu.
Using the Vision 2030 priority sectors, an assumed distribution of employment by sector was
developed and employment land requirement for key industrial sectors identified. This is a no-
migration scenario and focuses on understanding how to meet the employment needs of the local
population. This is therefore a minimum requirement for the Lamu projects.

This scenario suggests that, without migration, the population of Lamu County will be around
221,600 by 2040. The economically active population aged 15-64, equivalent to the labour force, will
number 71,400. The total required employment land, based on the assumed distribution of
employment by sector, would be approximately 940 ha. Key outcomes of this scenario are presented
in Table 2.

22
This defines the minimum requirement for the development of Lamu by 2040, to provide employment
opportunities for the local population in line with current economic policy objectives, in particular
those of Vision 2030.

Table 2: Key outcomes of the population-led scenario for the

development of Lamu
2020 2025 2030 2035 2040
Male Population 75,200 85,300 95,500 105,600 115,800
Female Population 68,700 78,000 87,300 96,600 105,800
Total Population 143,900 163,300 182,700 202,200 221,600
Population aged 15-64 78,900 89,500 100,200 110,800 121,500
Economically active population 46,400 52,600 58,900 65,200 71,400
aged 15-64
Employment land for key 607 689 771 853 935
8
industrial sectors (ha)

Project led scenario

This scenario is a ‘maximum capacity’ scenario. It assesses the capacity for economic activities and
employment based on full development of the available land under several land parcels (referred to
as ‘projects’) defined in the Port Development Plan (PDP) produced by LCDA for the area. After
considering environmental constraints, this scenario assumes the full potential of the proposed
economic activities are realised and that all labour demand that is not met by the local population can
be met through migration to the Lamu area.

The developable land area was identified for each constituent project, removing environmentally
constrained areas and land required for infrastructure. A mix of economic activities and phasing
assumptions for development were derived for each project. Associated labour demand was estimated
using international standards for employment densities. Demographic assumptions on household size
were used to estimate the total population of the Lamu Metropolis. This population has been
compared to the projected local population under the population-led scenario to give an indication of
the number of migrants that would be required to meet labour demand in Lamu.

Key outcomes of the scenario are summarised in Table 3. This scenario considers almost 18,300 ha
of employment land. It estimates that appropriate full development of this land could support 988,000
employees; the manufacturing sector alone accounts for almost 600,000 employees. This level of

8Employment land requirements were estimated for: Wholesale and retail trade; Transport and storage; Manufacturing (light and heavy); Information
and communication; Financial and insurance activities; Professional, scientific and technical activities; and Real estate activities.

23
direct employment and required employment in social services implies a population of 2,565,000.
This is considered to represent the extent of development currently envisaged in the medium - long
term within the Lamu Metropolis.

Table 3: Key outcomes of the project-led scenario for the development

of Lamu
2020 2025 2030 2035 2040
Employment land (ha) 1,936 3,976 8,181 13,427 18,283
Labour demand 74,903 166,755 385,265 657,124 988,479
Total associated population 194,329 432,628 999,532 1,704,84 2,564,51
3 2
Indicative migrant population 50,458 269,325 816,797 1,502,67 2,342,91
6 3

Benchmarking led scenario

The two scenarios above provide quantitative parameters for the potential scale of the Lamu
development. The benchmarking-led scenario identifies potential economic activities that could be
developed in Lamu and the requirements for these activities. It also examines international examples
of SEZs and similar industrial developments to identify key considerations for successful
development of a special economic zone in Lamu.

Potential activities have been identified following an assessment of demand drivers. This exercise is
summarised in Table 4. Relevant domestic demand drivers include GDP and population growth,
inward investment and investment in infrastructure. Production activities oriented towards export
opportunities, whether making use of local inputs or integrating into global supply chains, have also
been considered. This assessment of potential activities draws on examples of the development of
industrial zones in East Africa and internationally and an assessment of Kenya’s competitive
advantages and contextual factors. In particular, the importance of investments in infrastructure and
logistics, the erosion of labour cost advantages in China and India and Kenya’s relative labour cost
advantage, its regional role and strong comparative labour productivity, and access to markets in the
USA for light manufactured goods produced in Africa through African Growth an Opportunity Act
(AGOA).

The assessment has focused on labour intensive manufacturing activities that match the profile of the
local and national labour force. This reflects the importance of manufacturing, and light
manufacturing in particular, as a driver of economic development in sub-Saharan Africa. Relevant

24
sectors and activities are summarised in the table below. It is important to note that a full demand
assessment will be required to determine the viability and viable scale of these sectors.

Table 4: Assessment of relevant economic activities for Lamu

Sector Main products Specific activities Market drivers

Metals Steel Long and flat steel Focus on domestic

processing products service demand. Drivers: GDP and
centres population growth;
Stamping/pressing of Urbanisation; Investment
steel/aluminium sheet (infrastructure); Growth of
Welded steel tubes industrial activity;
Hot-dip galvanising Consumer disposable
facilities income; Substitution by
General machine shop other materials
facilities
Fabrication
workshops

Copper Copper tube

manufacture
Brass castings

Aluminium Aluminium extrusion

facilities
Aluminium foil mills
Aluminium casting
facilities

Building Aggregates Sand, gravel and Focus on domestic

materials crushed stone demand. Drivers include:
GDP and population
Cement Cement plant growth; Urbanisation;
Clinker grinding plant Investment
(infrastructure); Growth of
Light manufacture Pre-stressed and pre-
industrial activity;
building products cast concrete products
Consumer disposable
Ready mix concrete
income; Substitution by
factories
other materials.
uPVC windows and
doors
Float glass and glass
panels (IGU)
Plasterboard, cement
board

Light Apparel Apparel and textiles. Globalised supply chains;

manufacturing Facilities often Competition in clothes
specialise in a retailing; Shift in

25
 particular operation or manufacture away from
component, e.g. East Asia; Abundance of
patterns, cutting, low skilled labour force in
embroidery, trims, East Africa; Established
etc.; or assembly. export-oriented industry in
Kenya; Market access (e.g.
AGOA).

Furniture and wood products Local expertise

Food and Storage facilities Similar drivers apply

beverage Flour production domestically and
sector Frozen fruit and vegetables internationally. These
Fruit and vegetables preserves in containers include: population and
Beverage production economic growth;
Food packaging facilities disposable income; shifts
Meat processing in consumer choices (e.g.
Fish processing increasing meat and soft
Edible oils drinks consumption,
Pasta/noodles/couscous demand for packaged or
Vegetables/potato crisps and snacks processed foods); Kenya
as a major agricultural
producer.

Heavy Metallurgical facilities Significant capital

industrial Basic chemicals investments. Require
facilities Petrochemicals large, accessible markets
due to large production
capacity of plants. Other
key investment criteria:
raw material availability
(ores, gas, oil); energy
costs.

Tourism Leisure tourism Coastal resorts Economic growth and

Ecotourism disposable incomes
Cultural heritage (domestic and
Cruise tourism international); Consumer
choices (e.g. ecotourism);
MICE/Business tourism Perception and marketing
of Kenya/Lamu (e.g.
security concerns).
Industrial development of
area to drive business
tourism.

Key siting and environmental requirements for the various sectors were identified, as presented in
Table 5. These can be used to inform the assigning of land to uses in preparation of high-level plans.

26
Table 5: Physical requirements by priority industrial sector
Sector Locational Infrastructure Environmental Typical lot/plot
requirements requirements concerns size
Metal Good access to Reliable supply of Air pollutants1-2 ha for smaller
processing road/railway low cost electricity Water pollutants workshops to 10-20
sector network or gas ha for larger
facilities
Buildings Depends on facility: Energy intensive Noise, dust and air 10 ha
materials: if clinker grinding pollution.
heavy plant then next to
industrial port, or close to raw
sector materials source
Light Close to road/rail Medium-low More Limited 2ha -6 ha
industry network energy intensity
Apparel Access to power Less energy More Limited < 1Ha
manufacture and workforce intensive - reliable
power supply
Food & Close to water Significant Wastewater & various
beverage source quantities of water,
emissions to air
sector energy intensive (flue gases, dust &
odour)
Heavy Safeguarding site Energy intensive, Air pollutants; 300 ha per industry
industrial close to the port fresh/sea water for Odour; Water sector
facilities cooling purposes pollutants;
Safeguarding areas
for hazardous
facilities.

Various international examples of industrial clusters, including SEZs, were explored as case studies.
From these case studies, some key preconditions for success were identified:
Multi modal transport infrastructure is critical for the transport of goods and people;
Adequate customs clearance procedures are of critical importance for export-oriented activities, as
well as the quality of physical infrastructure;
One stop shop central facilities for business regulations can simplify investment and operations by
businesses;
Accommodation for workforce provided or close to site is important as a reliable supply of labour is
critical;
Some provision of ready-to-move-in factory shells can reduce the cost of investment and can support
local SMEs;

27
Training provision and skills development initiatives can be used to support major activities.
Clustering of activities with backward and forward linkages is beneficial, as best evidenced by the
‘industrial symbiosis’ associated with Kalundborg Industrial Network in Denmark.

The case studies demonstrate that the size of industrial economic zones tends to be from less than
1,000 ha to a maximum of 5,000-6,000 ha. The largest included case study is the 41,700 ha Khalifa
Industrial Zone Abu Dhabi (KIZAD) but this area includes residential and other uses. For comparison,
the identified land for the development of Lamu, as the combined net developable area of the Port
Industrial Area and Baragoni Node is 6,000 ha. This therefore represents a very large industrial area
by international standards.

Service-based special economic zones tend to be smaller – Sophia Antopolis in France for example
contains only 650 ha of business premises, though density of development is much lower and the total
area of 2,300 ha largely consists of green land. This model could be appropriate for the more
environmentally sensitive peninsula to the north of the Lamu Metropolis.

28
3. SITE ANALYSIS

Introduction
This section sets out a summary analysis of the LAPSSET Lamu node, Lamu County and the
environmental constraints that need to be taken into account when planning the future development
of the area.

Land use, ownership and settlements

Lamu county has a land surface area of 6,273 km2 composed of 5,517 km2 of arable land 650 km2 of
non-arable land, 130 km2 of coastline and 308 km2 under water mass.
The three main types of land tenure in Lamu County are public land; private land and community
land. The Lamu CIDP (2013-2017) states that all land in the county is public land, owned primarily
by the National Government except for a relatively small area of about 233 km 2 which is either
privately owned or community land (GoK, 2014). The County Government of Lamu is custodian of
public land from recently revoked ranches irregularly allocated to private developers. Land owners
in the county have title deeds, and some people in the settlement schemes and ranches have also been
issued with letters of allotment.

Land ownership and squatter occupation is a concern for various communities such as the Swahili,
Arabs, Korei, Boni and Orma and is the perennial source of conflict between farmers and livestock
herders. There are 13,000 households who have title deeds, which means only 42% of the county
households have land ownership. The majority of the county residents, especially in Lamu East have
no title deeds and live on ancestral land as squatters. Most of the landowners are also keeping their
parcels idle, without much economic benefit.

Land insecurity is a common problem in the county as the majority of Lamu residents have neither
title deeds nor letters of allotment to the land they live on or draw their livelihoods from. This poses
a threat to Lamu’s biodiversity and local livelihoods. There are squatters in the county (such as those
located within Amu Ranch) as a result of widespread evictions by ranch owners in the area.

The county comprises two constituencies; Lamu East and Lamu West. The wards include Mkomani,
Shella, Faza, Kiunga, Basuba, Hindi, Mkunumbi, Witu, Hongwe and Bahari. The Islands of Lamu,
Pate, Manda, Ndau and Kiwayu and the settlements of Mpeketoni and Witu are also part of the county.
Since settlement work begun in 1974, four settlement schemes have been completed and cover an
area of approximately 31,924 hectares which have been registered include Mpeketoni, Lake Kenyatta

29
phase 1 and 2, Hindi Magogoni and Hongwe. Some of these schemes were established by the German
assisted Settlement Programmes (GASP) who provided the necessary infrastructure facilities such as
roads, water-pipes and extensions to schools. However, the majority of schemes lack electricity, postal
facilities, and health facilities and have poor road networks.

Rates of urbanization in the county have been relatively slow, focused on Lamu, Mpeketoni, Witu,
Hindi and Mokowe. Lamu is the major urban centre within the county, primarily due to its strategic
location and as a tourist centre. Mpeketoni was designated as a market centre as it is the fastest
growing centre in the County due to its strategic location in a high potential agricultural zone and its
link to an international trunk road Garsen-Mokowe to Somalia.

Witu, Hindi and Mokowe are also growth centres that have maintained their status as they are located
along the international trunk road Garsen-Mokowe road. These centres have been proposed to be
growth points just like Mpeketoni above.

Pate, Siyu and Kizingitini are island villages with rich historical and cultural environments. These
villages attract domestic and international tourism. The communities have retained their original
traditional and cultural values. There is a lack of infrastructure facilities and poor road networks on
these islands.

Environmental constraints and opportunities

Summary of environmental policies and plans

The draft Lamu County Spatial Plan 2016-2026 sets out the following environmental policies based
on the national policies and acts that need to be taken into consideration when planning development
at Lamu:
Dodori National Reserve and Kiunga Marine Reserve are gazetted

Ensure the protection and conservation of the mangrove forests. Mangrove forests and swamps in
Lamu are gazetted.

Conservation of coral reefs.

Mitigate fishing disruption resulting from LAPSSET project through construction of a harbour to
cater for local marine production as well as maintaining and improving all the fish landing sites.

Protection of sand dunes as water reservoirs and breeding grounds for turtles.

30
Fresh water is one of the biggest concerns in the county. Water catchment areas and wetlands mainly
in Hindi are under high pressure and drying up, it is therefore proposed to gazette wetlands which
means encroachment of these areas will be prohibited.

Heritage preservation of historical sites such as Mkunumbi, Bahari, Faza and Hongwe.

Protection of the unique Tana River delta eco-system and as a resource for agriculture.

The following National legislation is also of relevance to development at Lamu:

Forestry Act – establishment of rich biodiversity areas as gazetted and protected areas.

Urban areas and cities Act, 2011

National Land Commission Act

Environmental Management and Coordination Act (EMCA)

Water Act, 2002

Key development issues

There are numerous Gazetted and Protected Areas as set out in the table below. There is also areas of
habitat beyond these protected zones and wildlife that occupy and travel through the area, these need
to also be taken into account when preparing detailed planning for the area.

Table 6: Environmental constraints and opportunities

Name Designation
Boni Natural Gazetted in 1976 and protected area under Wildlife Conservation and
Reserve Management Act (2013).
Dodori Natural Gazetted in 1976 and protected area under Wildlife Conservation and
Reserve Management Act (2013).
Coastal and riverine forests, mangroves, swampy grasslands and savannah.
Kiunga Marine Protected area under Wildlife Conservation and Management Act (2013)
Natural Reserve
Witu forest Gazetted through Legal notices No.454 of 1962 and No. 81 of 2000. Forest
Ecosystem Management Plan prepared under Forest Act 2005 as this is an
ecosystem was identified as a global biodiversity hotspot.
Amu Ranch Community based conservation initiative established in 2011, anchored by
Lamu Conservation Trust and supported by David Sheldrick Wildlife Trust.

31
 Lungi Forest This has been designated as a forest reserve but not gazetted. Occupies the
area between Dodori and Boni National Reserves, forming a wildlife
migratory corridor between these two reserves. The area is under
gazettement by Kenya Forest Services.
Awer This is a community conservation initiative created in 2013. Vast areas of
Community indigenous, open canopy coastal forest host a diverse range of vegetation and
wildlife, many species of which are classified as endangered.
Mangrove Mangrove forests and swamps in Lamu are gazetted. Mangroves are
forests and important stabilizer of coastline by reducing erosion from storm surges,
swamps currents, waves and tides.

Coastal zone issues

The Kenyan coast features a diverse marine environment including estuaries, mangroves, seagrass
beds and intertidal reef platforms and coral reefs, which are vital for the diversity and reproduction
of marine organisms. These coastal ecosystems are regarded as some of Kenya's most valuable
ecosystems; and some are protected as marine national parks and reserves (including Kiunga north
of Lamu). Lamu sits within a rich biodiversity hotspot, the whole coastal strip offers a mosaic of
habitats. As well as diverse and important terrestrial habitats, the marine environment is sensitive.
Lamu county has the largest mangrove forest cover in Kenya mostly concentrated in the Lamu
archipelago, with forest cover of more than 300 km2 (Ken Sea, 2006). The rapidly increasing human
population at the coast, which results in increased demand for more agricultural land, wood products
for fuel, house construction and industry, has put pressure on terrestrial ecological systems and means
that forests and woodlands are continually under threat and all have been modified by human use.
Lamu has various swamps from which the majority of the rivers/streams that flow through the county
drain into or from. These include the fresh water marshes of Ziwa Roka, Ziwa Gambi, Ziwa Kiboko,
and Ziwa Kambe. There are numerous small pans, likely of karstic origin, but little surface drainage
around the Lake Kenyatta settlement scheme.

Archaeology and cultural heritage

Lamu Old Town is a UNESCO World Heritage site, it is the oldest surviving Swahili town in East
Africa, designated by UNESCO in 2001. The town is characterised by beautiful stone buildings and
carved doors influenced by Arabic, Persian, Indian, European and Swahili building styles, and
includes a cluster of 160 historic houses. The buildings are well preserved and show the development
of the Swahili building technique using lime, coral and mangrove poles. The narrow street pattern
originates from the Arab traditions, it inhibits motorised vehicle use and creates a unique character.

32
The dwellings in the town are clustered into small wards consisting of closely related lineages.
Around the rest of Lamu County there are various cultural and sacred sites.

Topography
Lamu County lies between zero and 50 meters above sea level. The area is generally flat and
characterized by low, almost level plains with the exception of the coastal sand dunes and the
Mundane sand hills. Few of the slopes of these hills exceed 50. Because of the low lying nature of the
land, large parts of the county are susceptible to flooding especially during high tides.
The main topographical features include coastal Island and Dudol plains, sand dunes. The county has
four major catchment areas categorized as Dodori coastal zone, Duldol, Lamu bay drainage and Tana
River Delta.

Summary of constraints and opportunities

The map below provides a summary of the analysis of key environmental constraints and
opportunities these include:
Protected and gazetted habitats.
Fishing grounds and landing sites.
Marine habitats (coral reefs, mangroves, sea grass).
Landscape features (rivers, wetlands, beaches and sand dunes).
Critically Environmentally Sensitive Areas9.
Cultural and sacred sites.
Existing settlement locations.
Exiting infrastructure such as roads, schools and airstrips.

9
Identified through surveys and analysis undertaken by WWF

33
Map 3: Environmental opportunities and constraints

34
In reviewing the environmental constraints the following approach has been applied:
Gazetted and protected environmental areas – development in these areas should be avoided by
all means, a 1km buffer area around these environmentally sensitive areas has been defined to help
safeguard sites and guard against encroachment.
Rivers and water bodies must be protected – a 30m buffer zone along these assets is recommended.
Sacred sites and sites of local / heritage importance should be safeguarded. These sites should be
protected and could be integrated into landscape.
Seasonal wetlands should be protected and development should be avoided or they should be
incorporated into the landscape design. Green buffer zones have been proposed to protect these
wetlands. Flood risk assessment and drainage management studies are recommended to better
understand flood risk around these areas to inform the identification of flood alleviation and
mitigation measures which may be appropriate.
Belle Belle (pond) within Hindi-Magagoni settlement is protected.
Mangroves are gazetted, a 50m buffer is recommended to ensure protection and conservation of this
highly important vegetation for the county and for Kenya.

Environmental opportunities
Although there are some significant constraints (both environmental and other) to be addressed in the
development of Lamu, the environment and cultural heritage of the area also provides a range of
opportunities:
By bringing a significant number of jobs and investment to the area in a planned and controlled
manner, this can enable the protection and enhancement of the most pristine natural areas that might
otherwise be threatened by those seeking land to pursue a livelihood.
There are opportunities to improve access to valuable natural assets (in a controlled and sensitive
way), enabling more people to enjoy them.
There is an opportunity to maximise the value that the heritage assets such as the World Heritage Site
and other scared sites offer, by upgrading facilities and extending the tourist offer in Lamu. This could
provide much needed revenue to maintain and protect these assets.
By implementing an eco-system services approach to development the benefits that environmental
assets offer can be fully understood and utilized.

35
 4. Investment Framework Strategy

Approach to developing the investment framework strategy

This section sets out the preferred investment framework strategy. This includes a Framework plan
which has been developed through consultation with stakeholders. Further detailed planning will be
required, this is set out in the priority project: Planning and Social Management Framework, and this
needs to be subject to a programme of community engagement before being formally adopted.
The framework plan has been based on the following:
A set of common assumptions.
Environmental requirements and quality of life.
A review of what makes a successful city informed by international benchmarks.
A land use budget and development model tool to align the planning of land with socio economic
parameters and associated infrastructure requirements.
In developing the framework strategy a series considerations have been analysed in order to refine
and develop a preferred investment framework strategy (see diagram below).

Environmental Sector Community Infrastructure

constraints requirements and housing and utilities

Environmental constraints (identified in chapter 3) have helped to assess the capability and potential
of land to support development at the Lamu node. The guiding principles for defining developable
parcels of land include:
Avoiding development within gazetted, protected areas and applying a 1km buffer around them.
Avoiding development in Critically Environmentally Sensitive Areas (CESAs).
Providing a buffering around rivers and water bodies.
Providing a buffer around sacred sites.
Avoiding development in seasonal wetlands.
Ensuring protection of mangroves with a 50m buffer.

The outcome of this is the developable land parcels identified in the map below. These formed the
basis of defining the gross development areas that were fed into the land use budget and development
model tool.

36
Map 4: Potentially developable areas

37
From the land areas identified above, high-level development parcel areas have been defined in line
with urban design principles discussed in more detail below. These areas have been measured and
inputted to a spreadsheet-based development model tool. The process applied through this tool is
summarised below.

• Sectoral land uses (e.g. light industry, heavy industry) are assigned to defined plots.
• Available land for employment uses and floorspace is defined by land use.
Sector • Labour demand is associated by project and land use area.
requirements

• Population associated with the Lamu development and number of households are estimated.
• Required employment in social services is estimated.
• Residential zoning of plots by density then takes place to ensure the population can be
Community & accommodated.
housing

• Employment land and population figures are used to estimate water, power and transport demand.
Infrastructure
& utilities

Appropriate economic or residential uses were identified for each plot. For industrial and commercial
uses, this was informed by considering the relevant sectors and their siting and infrastructure
requirements as identified under the benchmarking scenario.

Within the development model tool, a series of assumptions regarding employment density by activity
have been applied to generate estimates of labour demand associated with the industrial and
commercial land uses. As with the project-led scenario discussed in regards to the economic vision
(see chapter 2), the model assumes that there is full demand for these economic activities and that
labour demand is fully met by migration to the Lamu node.

From estimates of labour demand, estimates of population and the number of households are derived.
These population estimates relate to the Lamu node development (not Lamu County as a whole). The
estimates and consideration of the urban design principles discussed below were then used to define

38
the zoning of mixed use/residential land according to density, in order to ensure the population can
be accommodated (allowance was also made for services, public facilities and open space to meet the
needs of the population).
Finally, from estimates of employment land and population, estimates have been developed for power,
water transport demand (in terms of generated trips), and solid waste facilities.

What makes a successful city?

International benchmarks suggest there are a number of city planning principles that make for
successful cities that include: responding to the capacity of natural systems; developing accessible
neighbourhoods with a choice of public transport; developing a community that incorporates a mix
of jobs and facilities; incorporating green infrastructure; ensuring resources are used efficiently; and
ensuring the approach to development is deliverable.

Responsive Accessible and Healthy Community Focus

Meeting needs of the Transport networks structured to support new Mixed use communities with local
population working within communities. Public transport planned from the employment and community facilities
capacity of natural systems. outset linked with development. accessible by walking and cycling.

Green Infrastructure Resource Efficient Deliverable

Development restricted in environmentally

sensitive and risk prone locations. Building performance Integrated, viable
Afforestation, green - blue network. Renewable Energy – Waste, Wind, Solar approach to delivery
Low carbon smart infrastructure

39
Through a careful and considered approach to Lamu’s development, Lamu could become Kenya’s
first Eco-city. To achieve this a detailed master planning should incorporate the Eco-city features in
the table below.
Table 7: Eco-City Features

Theme Features / indicators

Carbon - Commitment to low or zero annual greenhouse gas emissions.
- Commitment to local energy production and minimised energy consumption
with emphasis on renewable energy contribution.
Transport - Promoting an ‘Active Travel’ network, this is a network that enables travel by
physically active means including walking and cycling.
- Incorporating mass transit provision
- Minimise use of the private vehicle by developing a road network and setting
car parking standards that encourage more sustainable modes of transport.
Food - Promote local food production in order to reduce the ‘food miles’ of produce
consumed (i.e. the distance that food is transported).
Resources - Encourage reduced rates of waste per capita.
- Minimise waste streams to ensure waste is reduced, reused, recycled or
recovered.
Water - Incorporate Sustainable Urban Drainage and other blue infrastructure.
- Encourage reduced rates of water consumption and increased use of grey water
recycling and rain water collection.
Biodiversity - Commitment to no net loss of biodiversity.
- Incorporate green infrastructure.
Health - Manage land use and transport to ensure good air quality.
- Encourage health lifestyles.
Economy - Support the local economy so that it improves local economic performance.
- Promote job creation to ensure that there is a balance between homes and jobs.
Urban form - Encourage accessibility and connectivity.
- Incorporate high quality public realm.
Resilience - Achieve a good level of disaster preparedness.
- Develop appropriate and adaptable infrastructure.
Wellbeing - Encourage wellbeing by enabling community development and social
networks to thrive.

In bringing the new community to life at Lamu it is important to consider how the new community is
integrated with existing community, the issues below will be important to achieving this.

40
As set out above an important feature of what makes a successful city is a green infrastructure
network. The green infrastructure network can help reinforce the other principles of successful cities
(such as being responsive and accessible) and will be crucial to achieving the features of an eco-city.
Key features of a green infrastructure network are:
Connecting green spaces as part of a regional system and landscape

Including a system of parks and green spaces for a range of functions

Incorporating walking and cycling routes

Enabling sustainable drainage infrastructure systems

Net positive biodiversity impact

Protecting sensitive wetland areas

Providing multiple attractions and active uses (which can generate income)

Managing access in a safe and secure manner

Managing the landscape

41
Preferred Planning Framework strategy

In developing the preferred framework strategy different city development models were considered:
single core, transit oriented and multiple nodes. Each model of city development has advantages and
disadvantages which are set out below.
Table 8: Comparison of Urban development models

Single Core Transit Oriented Multiple Nodes

Advantages Advantages Advantages

- One City Centre - Multiple employment centres - More specialised hubs
- Strong identity - Density enables better - Self-sufficient
- Viable development services - Local jobs & services
- Concentrated - Accessible by public transport - Planned neighbourhoods
infrastructure - Walkable - Responding to natural
- Planned neighbourhoods environment
- Protection of agriculture land
Disadvantages Disadvantages Disadvantages
- Congestion - Up-front investment - Up-front investment
- Poor liveability - Requires co-ordinated - Requires co-ordinated
- Poor access to peri-urban approach approach
areas - Regulations need to be - Regulations need to be
- Pressure on core strengthened strengthened
- Requires land assembly - Requires land assembly
- Requires public sector
interventions

42
The preferred approach for Lamu separates the port industrial area from the supporting mixed use
township area, in order to locate industrial uses away from residential areas, and to ensure that access
to the industrial areas can be controlled (which is important as they will be managed as an SEZ).

The overall model of city growth is one that should be based on a transit oriented approach to
development, with a hierarchy of centres, with a town centre providing the main focus for shopping,
services and employment and a series of district and neighbourhood centres serving local shopping
and service needs. The neighbourhood centres are within walking distance from all residents, and the
hierarchy of centres are connected by a public transport system, that would also link the township
with the Port Industrial areas and other development areas. To the north of the township and Port
Industrial Area are two self-contained nodes that are proposed for light industrial zones and mixed
use areas including residential areas served by neighbourhood centres. The development areas will
be connected with each other and with the existing communities at Lamu by both non-motorised and
public transport systems to enable adequate access and connectivity between, homes, work, services
and other public facilities.

The preferred long term development strategy for the full development of Lamu node is set out in the
plan below. This includes a total of 9,550 ha, and includes the full development of: the Port (401 ha);
the Oil Tank Storage and Refinery (33 ha), Port Industrial Area South and North (with a total of 7,577
ha of employment land); the Tourism & Leisure Zone around the Resort City (885 ha total area); and
the Special Economic Zone nodes (to the north) (654 ha). The phase will also see the full development
of Lamu Metropolis incorporating the township area and green buffer zones.

Table 9: Full Development Phase

Development strategy Key Development
Statistics

43
 - Total developable land
19,875 Ha (excluding
reserved areas and green
buffers).
- Total labour demand:
424,800
- Total population:
1,102,000
- Total households:
374,800
- Capacity to house
1,158,500 people, or
394,100 units.
- Power demand: 1,430
MW
- Water demand: 279,700
m3/day

44
Map 5: Full Development Phase

53
 Residential use represents the biggest land
Distribution of developable land by use
Tourism & take.
Leisure
11% Industrial &
Commercial
Logistics 37%
7%

Residential
45%
Industrial & Commercial Residential
Logistics Tourism & Leisure

The resident population is accommodated

Residential population by density type
High Density
in predominantly medium density
Low Density 18%
25% residential premises.

Medium Density
57%

High Density Medium Density Low Density

The light industries sector takes up the

Employment floorspace by land use
largest proportion of the floor space.
Tourism &
Business Leisure Logistics
services 9% 14%
1%
Food and
Heavy industries beverage
14% 5%

Light industries
Medium 30%
industries
27%

Logistics Food and beverage Light industries

Medium industries Heavy industries Business services
Tourism & Leisure

Further definition of project components

Port industrial zone and light industrial zone
The port industrial zone will incorporate those sectors that need to be located in close proximity to
the port for operational reasons (see chapter 2). The port industrial zone will also include a light

54
industrial and logistics zone in the wider area, accommodating a range of industrial units (in terms of
size, type, layout and quality) to suit occupier needs. The industrial zone will be laid out in a way that
allows for easy servicing and access for occupiers and suppliers, and will include local centres with
shops and services that will cater to the needs of workers.

Special Economic Zone

The special economic zone should incorporate all areas within the Lamu node, this will include the
port, the port industrial zone, resort city and tourism and leisure zone and the supporting township
area.
As demand requires additional self-contained SEZ nodes could be developed on the peninsula. Given
the sensitive environment in this location, these should be focused only in those areas identified. The
uses suitable would include light industrial development or services and focused on low
environmental impact / green industries as well as ancillary residential and commercial development.

Tourism and Leisure Zone and Resort City

The Resort City is where the initial focus for tourism related development will take place at Lamu
serving and complementing the existing cultural and natural heritage resources and the
accommodation offer concentrated around Lamu Town and other offshore islands. The resort city
concept is to have a hub of activity set within a conserved and managed natural landscape framework.
The resort city a central area in southern part of the Lamu node on the main land. In later phases
tourism and leisure development would grow adding additional clusters to the initial phase. The
Resort City takes advantage of the coastal location, and the ease of access to Lamu old town World
Heritage Site, local villages and cultural and sacred sites.
The following sets out the short term and medium term components of the Resort City development.
In the short term the Resort City will be focused on the Kenyan domestic market, and re-establishing
Lamu on international visit itineraries.

Table 10: Components of the Resort City and other Tourism Infrastructure
Short term components Medium term components
Management plans for existing natural and Lamu will be a key node in the LAPSSET
cultural heritage resources including marine tourism circuit. Tours along corridor would
environment. Opportunity for interpretation be linked by travel by road/air.
facilities, basic amenities, campgrounds and Seek to establish cruise ship tourism linking
ecologies. with regional East Africa, Indian Ocean,
Diversify and expand markets utilising existing Middle East circuits.
airport - seek to develop new direct routes to serve

55
 Lamu including other Kenyan cities, safari Provide additional facilities for events and
destinations and regional routes up to 3,500km conferences.
which could be supported by current runway Develop the tourist facilities at the proposed
infrastructure and aircraft which have the Fisherman’s Wharf.
potential to make thinner non domestic routes
Develop and widen the retail offer to broaden
economical such as the Embraer 170/190/19510.
appeal to a tourist market.
Enhance landside infrastructure to Manda Airport
Develop other tourism and leisure hubs in the
including improved connection to the mainland at
Lamu node, potentially to the north, to take
Kililana possibly including a temporary/fixed
advantage of natural and landscape assets.
crossing.
Broaden, strengthen and expand the hotel and
accommodation offer to appeal to include greater
representation of higher key accommodation
addressing mid– high end regional East African
and international markets. As well as short breaks,
sun, sea and sand there is potential to widen
accommodation to link with niche markets
including special interest tourism (e.g. spa
/wellness, eco tourism and cultural heritage). The
first phase of Resort City will help to establish a
hub.
Develop the business tourism segment: with a 3-
4* hotel in the resort city supporting short and
long stay serviced accommodation for rent/sale
with associated recreation uses.
Plan to engage the community in the tourism
sector using the existing tourism trust fund which
is available to support grants and loans to small
businesses. Opportunities exist to build on the
distinctive Lamu cuisine, and homestay
opportunities linking with opportunities for
adaptive use of historical buildings within Lamu
Town.
Eco tourism and special interest tours – cultural
and natural heritage resources.
Civic capital, housing and social amenities zones.

The civic capital will accommodate all the city scale public services focused in a central zone so that
they can serve the metropolis as a whole. This will include the administrative buildings for the County
Government of Lamu, headquarters for services such as the police and other security services and

10
Destinations including East Africa Community destinations, Addis Ababa, Gulf States, Johannesburg, Cameroon, Gabon and Angola are within
range and could become commercially viable connecting Lamu to destinations and international hubs additional to Nairobi.

56
public facilities such as hospitals, government functions, institutional uses and higher education.
Housing areas will be a mix of high to low density, and the exact form and mass of the housing will
be determined through more detailed master planning. These areas should provide for a mix of uses,
including social amenities such as schools and health centres, but also shops and services and leisure
uses.

Phasing

The phasing of the development will be an important factor in the success of Lamu. Phasing will be
influenced by several factors
Economic drivers and investor interest.

The availability and supply of water for industrial, commercial and residential use.

The availability of power generation and distribution networks, for industrial, commercial and
residential use.

Workforce skills and capacity to take up opportunities in Lamu.

Security and safety factors which may restrain investment, tourism and in-migration to take up
employment.

The timescale for reaching full development as set out in the plan above is not identified as it will be
subject to the factors set out above, a detailed demand assessment would provide greater certainty
around timescale for development. The long term development strategy therefore includes three
phases:
Phase 1: Initial development

Phase 2: Medium term

Phase 3: Full development

In total 9,550 ha of employment land will be developed and there would be additional population of
1,102,000. Employment land and population are split across the three phases as follows:

57
 Employment land by phase Population by phase
(ha) 1,200,000 1,102,011
12,000
1,000,000
10,000 9,550
800,000
8,000
600,000
6,000 459,599
4,254
400,000
4,000

2,000 200,000
532 56,776
- -
Phase 1 Phase 2 Phase 3 Phase 1 Phase 2 Phase 3

Phase 1: Initial development

Phase 1 will focus on the first phase of the Port Industrial Area (c. 460 ha of employment land) the
Port will consist of an initial 3 berths and accompanying logistics area (64 ha). Some heavy industry
will be developed in close proximity to the port (85 ha). The oil storage and loading facility will be
developed within the port zone. The initial phase of the Resort City (28 ha) will be built out and first
phase of the residential township will be established around a neighbourhood centre. The proposed
Amu Power Plant first phase and/or an Integrated Water and Power Plant (IWPP) will be constructed
partly to support the power needs from the industrial and residential uses in this initial phase of
development.

58
Table 11: Initial Development Phase
Development strategy Key development
statistics
- Total labour demand:
21,900
- Total population: 56,800
- Total households:
19,300
- Capacity to house
64,900 people, or 22,100
units.
- Power demand: 75 MW
- Water demand: 14,900
m3/day

59
Map 6: Initial Development Phase

60
Phase 2: Medium term development

In phase 2, there will be full development of the Port Industrial Area (south) and development
extending to the north, this will include a total 3,681 ha of employment land. The oil refinery will be
developed (33 ha). There will be greater provision of land for medium and heavy industries (1,789
ha). The Resort City will be fully developed (70ha) and wider Tourism & Leisure Zone will be
established (320 ha total area). The residential township will be expanded around a southern core.
Table 12: Medium Term Development Phase

Development strategy Key Development

Statistics
- Total labour
demand: 177,200
- Total population:
459,600. Around
2/3 likely to be
migrants.
- Total households:
156,300
- Capacity to house
485,900 people, or
165,300 units.
- Power demand:
630 MW
- Water demand:
119,800 m3/day

61
Map 7: Medium Term Development Phase

62
Establishing the Supporting Infrastructure Platform

The key development areas at Lamu will be supported by an infrastructure platform which will be
phased to be implemented in line with development so that infrastructure services are in place to
attract and meet demand from prospective industrial, commercial and residential occupiers.
The infrastructure platform required includes linkages with the strategic LAPSSET infrastructure
projects as well as the enabling utility, transportation, solid waste management, environmental and
social infrastructure required to make Lamu Node a success.
Port

Summary of existing proposals

The Port project is one of the strategic LAPSSET project. It consists of 32 deep sea berths at Manda
Bay estimated to cost US $5 Billion. Currently, three berths are being constructed by the Government
of Kenya costing US $480 million, first berth is due to be completed in June 2018 and the other two
by December 2020. The other berths are intended to be constructed and operated by the private sector.
The port is to be directly linked to the planned logistics and industrial facilities within the adjacent
port industrial area. It will be directly connected with other Strategic LAPSSET projects including
the road, pipeline, railway and airport.
Planned facilities
32 Berth Facility when completed

Dredging of main channel underway due to be complete 2018.

Construction of three Initial berths is underway financed by Government of Kenya. Concession/s to

be let for the construction and operation of the remaining berths.

Further 3 berths to follow as a second phase.

28,000 Ha of land identified for the port including associated oil storage/tank farm and loading
facilities.

A detailed technical and financial study is to be completed during 2017 to explore options for
structuring the finance and delivery of the next phases of the port including consideration of finance
using PPP. LCDA working with AfDB - NEPAD Infrastructure Project Preparation Facility is to
prepare a PPP Transaction Advisory Study to include a review of the existing project feasibility
studies, including all technical options, conduct financial and legal due diligence, undertake market
sounding and related analysis as well as structuring and definition of the scope of the project,
preparation of transaction plan, financial models and schedule. This is expected to be completed in
the 2017/18 financial year.

63
Phasing
First berth under construction to be completed in 2018. A further two berths to be completed by 2020.
There is currently no estimated date for the completion of the full 32 berths. The exact type of berths
to be planned are subject to the conclusions of further studies.

Issues and opportunities

Linked to the potential industrial sectors to be located at Lamu as well as opportunities linked to
LAPSSET, the domestic and wider East Africa markets the port will serve. The type of berths that
could be accommodated within the port are set out in Table 13 below including the requirements that
these types of berth would have and the sectors that these berths would cater for. These were identified
with in the previous 2009 JPC study. The requirements and links to economic sectors and benchmark
examples have been added by Atkins.

Table 13: Indicative port terminal types and requirements

Terminal Coal Bulk solid Container General / break Bulk Liquid
type import terminal terminal bulk terminal terminal
terminal
Planned 1 for coal 4 for general 5 for container 10 for cargo ships 3 for liquid
Berth types carrier up cargo ships up ships up to 100,000 up to 30,000 oil carrier:
to 30,000 to 100,000 DWT DWT Product Oil:
DWT DWT 30,000 DWT
Crude Oi
Export:
200,000
DWT
LNG import:
30,000 DWT
Requireme 18m draft 12m draft
nts Large area for: Large area for:
Quay apron Quay apron
(mooring and (mooring and
loading/unloading), loading/unloading
Storage yard, ),
Handling Storage yard,
equipment, Transit sheds

64
 Building and
facilities
(administration,
workshops,
customs…)
Rail yard
Selected Coal Clinker Apparel Metal processing Refined
industry power grinding plant Packaged food Building materials petroleum
sectors to plant Grain terminal Bottled beverages Livestock Crude oil
Phosphates, export
use
fertilizer LNG (power
terminal generation
and process
industries
Examples

Manjung Mombassa Port Durban Port Port Olvia, LNG

Power Ukraine Terminal,
Plant, Singapore
Malaysia
Notes: DWT deadweight tonnes

Atkins has identified additional potential for other types of facilities that could be considered within
plans for the port. These include:
RoRo terminals in order to accommodate vehicle and heavy equipment import and export.

Other specialist terminals including ship repair and offshore oil and gas servicing facilities.

Industrial bulk handling (for example to support power and processing plants)

Fishing port- the Ministry of Agriculture and Fisheries has plans to develop Lamu as a centre of deep
water fishing which will require a harbour to accommodate the fleet along with and processing
facilities.

Port services (pilotage, tugs) and port-related services (agencies, port supplies…)

Ferry, cruise terminals and marinas

Navy and security facilities.

It is recommended that the feasibility and market is explored through the upcoming Port PPP and
feasibility studies.

65
Pipeline Infrastructure

Summary of existing proposals

The first phase of pipeline development for LAPSSET are for a heated 840 km crude oil pipeline
connecting oilfields in Kenya along with a storage and tanker loading facility at Lamu. This will have
a capacity of an estimated 300,000 barrels per day. The capital expenditure for the pipeline is expected
to be in the order of US $4.7bn.

Planned facilities
There will be a need for a tank farm with working capacity of 199,785m3 proposed at Lamu (4 days
of supply). Additional tank farm storage could be planned for US $365m. The export terminal will be
located at Lamu. Three options for the loading facility and pipeline have been evaluated including:
Option 1 - Single point jetty close to Manda Island

Option 2 - Single point jetty between Ras Tenewi & Ras Mwana

Option 3 - Loading jetty at Lamu Port

A loading jetty within the southern part of the Port Industrial area has been identified by LCDA and
Government of Kenya as the preferred option (Option 3).
The tank facility will be located at the southern edge of Lamu Port with land in this area also reserved
for a future oil products refinery.

Phasing
Previous studies have estimated a six year design and construction period for the pipeline and
associated facilities. Further studies are to be undertaken to confirm the final routing and loading
options including comparative evaluation of the cost, viability, timelines and construction
methodology. The power and water options associated with the pipeline and storage facilities are also
to be finalised.

Issues and opportunities

A pipeline serving Lamu Port will helped to unlock further potential downstream opportunities and
provide the foundation for a possible petrochemicals cluster to be developed within the Port Industrial
area.

66
Key issues and opportunities identified in preparation of the planning and investment framework are:
Earlier studies undertaken by Toyota Tuscho and JPC highlighted the opportunity for an oil refinery
at Lamu. Kenya Pipeline Company is undertaking further economic and market studies to define the
potential for development of the Petrochemicals industry nationally which is due for completion in
2017.

Demand for a refinery normally driven by end user demand both within Kenya and the wider East
Africa market.

Export opportunities also exist by sea, and via railway and a potential product pipeline.

Locating the oil storage facility outside of the Port industrial area could compromise future
opportunities.

The pipeline alignment and loading terminal options are to be finalised. The space and setback and
safeguarding requirements for accommodating a pipeline and tank storage facilities within the Port
Industrial area have been considered in the proposed zoning and need to be considered in the next
stages of detailed master planning.

Railway and Rail Hub

Summary of existing proposals

Two studies have been undertaken to explore the feasibility of a LAPSSET Corridor railway in JPC
(2009) and China Civil Engineering Construction Company (2015) which have been considered to
help inform the planning and investment framework. The data referred to below relate to the CCECC
study.

Plans for the railway are for a Standard Gauge Railway (SGR) to link Lamu with Ethiopia and South
Sudan (1,776 km of the railway will be in Kenya). The railways will consist of a single track line with
passing loops. There will be branches at Isiolo to Nakodok and Moyale. In addition, the study also
considers a branch linking from Isiolo to Nairobi linking the LAPSSET Corridor by rail to the capital.
Trains would take approximately 7 hours 10 mins to reach Isiolo and further 6 hours to Moyale or 10
hours 30 mins to Nakadok. It is proposed that the railway will run diesel traction engines with
potential for future electrification. The line capacity would be for around 28 trains per day with a
maximum speed of 120 km/h.
The main rationale for the project is for freight services, particularly serving Ethiopia and South
Sudan. The railway is likely to be used for the transportation of: liquids, bulk, break bulk, containers
and refined petroleum. Estimates for passenger demand are also considered.
67
The previous freight estimates which have been prepared are summarised below.

68
Table 14: Summary of pass through freight traffic demand (10,000 tonnes per year)
Section and Projected Initial – 2025 Medium Term – Long term –
distance freight flows 2030 2040
Lamu-Isiolo Lamu - Isiolo 409 806 1650
544 km Isiolo Lamu 223 525 910
Isiolo Nakadok Isiolo – Nakadok - 370 500
755 km Nakadok - Isiolo - 225 325
Isiolo Moyale Isiolo – Moyale - - 610
477 km Moyale - Isiolo - - 300
Source: China Civil Engineering Construction Corporation (2015)

The overall cost of the project was estimated to be in the order of USD 10.4bn and construction with
a financial rate of return between 9 and 12% depending on phase.

Table 15: LAPSSET Railway - Key statistics

Section No. of stations Investment cost Financial Construction
USDbn11 Internal Rate of period
Return %
Lamu - Isiolo 5 3.3 10.5 2 years
Isiolo – Nakadok 10 4.2 9.22 5.5 years
Isiolo - Moyale 10 2.9 12.63 4 years
Total 20 10.4
Source: China Civil Engineering Construction Corporation (2015)

Planned facilities
Facilities planned at Lamu as part of the project include
At Lamu a freight terminal is proposed which would also be the main terminus and depot for the
railway. The estimated cost of this facility is around USD 36m. Two alternative layout options were
considered for the depot (see below). The transverse layout was deemed most effective from an
operational and cost perspective.

11
Investment cost includes rolling stock

69
The marshalling yard and terminal would include a freight line spur into the port to enable efficient
loading.

Alternative layout options for Lamu Freight yard

70
Phasing
A phased approach to development has been recommended for the line. The Chinese study assumed
that the Lamu Isiolo phase would be completed first followed by the lines to Nairobi and Nakadok
and finally the link to Moyale and onwards to Ethiopia. Recent discussions indicate that the Lamu-
Isiolo-Moyale phases are likely to be progressed first with other sections being implemented
subsequently. There is currently no firm timetable for implementation of proposals.

Issues and opportunities

There are a number of issues that remain with the proposed railway:
There is no up to date freight demand model informed by detailed analysis of industrial and economic
demand. An assessment is required of current and future freight demand potential along the route and
from Ethiopia and South Sudan. This should be supported by empirical analysis of current demand
and informed assumptions to inform forecasts of accounting for planned projects and economic
development potential.

There is no current assessment of minerals resources potential linked to the LAPSSET Corridor and
nearby areas. Such demand could underpin the rationale and timing of proposals. The Ministry of
Mining is to undertake such an assessment to identify economically viable and accessible resources.
Previous studies have indicated potential minerals projects which could help to support or link with
industrial activities at Lamu and other locations on LAPSSET. Some resources may also have
potential for export.

Existing studies were undertaken prior to Addis-Djibouti line which has changed the competitive
environment. The linkage and potential competition from a possible link between Moyale-Isiolo-
Nairobi – Mombasa routing via the SGR could also impact on phasing and viability of the Isiolo-
Lamu section.

There is no appraisal of the cost benefit analysis of the railway vs. freight transport by road. The
wider economic, social and environmental costs and benefits of the project would help to establish
its importance and help inform technical and financial structuring of the project.

Airport provision

Summary of existing proposals

The most recent study of airport proposals at Lamu was conducted in 2009 by JPC consultants.
There is an existing airport (ICAO: HKLU) at Manda Island which is an ICAO Cat 2C and is not
equipped with radio navigation, instrument landing or lighting aids which affects its hours of

71
operation and potential for disruption during unfavourable conditions. There are two runways at
Manda, RWY 15/33 [2000 x 30 metres] paved with asphalt and RWY 08/26 [1463 x 24 metres]
surfaced with coral as per the current aerodrome charts. However, certain operators/airlines apply a
usable length on RWY 15/33 of 1663m for safety reasons, due to the limitations noted above.
Demand was 44,670 passenger per annum (PPA) in 2007 and is projected to be 74,611 PPA for 2015,
and 87,069 PPA for 2020. The airport has a domestic routes focus mainly for small General Aviation
aircraft and regional Turboprops, with currently several scheduled flights per day to Nairobi.
Operators include Safari link, Air Kenya, Fly 540/Fly Sax, Jambo Airways etc. Scheduled and Charter
Flights from Nairobi originate from Jomo Kenyatta International Airport or Wilson Airport with direct
flights to Manda or via Malindi Airport, Ukunda Airport and Moi International Airport Mombasa.

Planned facilities
There is a long term plan to establish a new international airport Category 4E to cater initially for
850,000 PPA and ultimately 1.2m PPA. This consists of two runways: one 2.5km extendable to 3km.
The rationale for the airport is based on accommodating medium-long haul aircraft such as the B757
in order to accommodate larger charters as well as wide bodied aircraft.
Planned layout of proposed Lamu international airport

72
Phasing
There is no clear timetable for the development of the international airport. The level of capacity
implied by the new airport is considerable and significant progress would need to be made in the
growth of Lamu Port city before a facility of that scale would be needed.

Issues and opportunities

There are opportunities to upgrade the facilities at the existing airport at Manda Island and to improve
access to the mainland by building a bridge, in order to increase the capacity of the airport. In addition,
there is available land for additional freight and passenger facilities to be expanded.
Linking Manda airport and the mainland will enable equipment and machinery to be brought in by
air to support development of the oil and gas sector as well as other industries requiring efficient air
transport platform to support import/export of time sensitive or high value, light weight inventory.
One sector which could benefit is shellfish and crustaceans and other high value agricultural products
which would benefit from an efficient cold chain linking to potential end markets.

Potential for further upgrading runway facilities at Manda should also be explored (for example
runway upgrades and extensions and development of a taxiway to improve hourly capacity) utilise
the potential of these facilities before a larger airport is required.
Expansion of Manda airport is likely to be sufficient in the short and medium term particularly with
the advent of short range narrow body economical aircraft which have come to market since previous
studies were completed and have changed the commercial dynamics of the industry. Aircraft have
been designed which enable lower volume routes to secondary and tertiary destinations to be served
economically.

The site of the international airport has been safeguarded within the plan to support long term
development needs of the area. Several environmental issues were noted in relation to the planned
site. However, it is understood that alternative runway options are being considered which could
reduce the environmental impact of the project.

Highways

Existing provision
The existing road network in Lamu County is composed of 170km in Lamu East Constituency and
675km in Lamu West constituency whereby 99% of this road network is unpaved.

73
Planned projects and improvements
The proposed road network for the LAPSSET corridor starts at Lamu Port and passes through the
towns of Garissa and Isiolo where it splits into two arms; Isiolo – Nginyang –to link South Sudan
and Isiolo – Marsabit – Moyale to link Ethiopia.

The proposed improvements to the strategic road network include:

Spot improvements and maintenance works on Malindi – Garsen – Hola – Madogo (B8). Technical
and financial proposals evaluation reports together with draft contract agreementhave been submitted
to the World Bank for no objection.

Mokowe Township Roads – 15 km being procured under the roads 10,000 programme for low volume
sealed roads.

Lamu – Garissa - Isiolo highway 570 km over 3 years construction period over three stretches:

Development of highway between Lamu and Garsen

Development of highway between Lamu and Garissa

Realization of highway connecting Garissa and Isiolo

Development of the Highway connecting Isiolo with Nginyang - Inception Report Preparation at 50%
complete and final designs to be completed in Dec 2017.

Nginyang’ to Lokori to Lokichar - Designs are complete and scheduled for upgrading under Design,
Finance, Build and Maintain framework.

Leseru – Kitale – Lodwar – Lokichokio – Nakodok at the border with Southern Sudan has its designs
complete and World Bank has committed to fund construction of Loichangamatak – Nakodok section
(298Km) while KfW has committed to finance Kitale – Chepkorniswo (66Km). GoK will finance
construction of Lokichar – Loichangamatak (45Km). AfDB, JICA and Exim Bank of China have also
expressed interest in funding other sections but with no commitment yet.

74
Map 8: Proposed transport and water infrastructure to support LAPSSET

75
Future demands
In order to understand the future level of transport demand to inform the strategic level road network
and phasing assumptions a basic analysis of trip demand was carried out. This has helped to inform
the planning and investment framework.

Table 16: Trips Generation estimates by phase

Phase Total Trips Generated

1 258,808
2 2,032,636
3 4,696,184

NB – trips rounded to nearest thousand. The projected trips exclude freight and logistics movements
associated with the Port.
The implications of this level of demand are as follows:
The level of demand generated in Phase 1 will require largely 2 lane roads. The cost of constructing
this 7m wide 2 lane single carriageway with 2m wide shoulders would be between US $0.95 - 1.4$
million per kilometre.

Phase 2 will require expansion of Trunk road and minor collector roads to 4 lanes, and the major
collector road to 6 lanes

Phase 3 will require 6 lane Trunk road and minor collector roads, and an 8 lane major collector.

Issues and opportunities

The proposed transport networks for Lamu would need to incorporate the following:
Establish a multimodal transportation system (local sea transport, road transport, bus and mass
transit options as well as walking and cycling networks).

Build trunk roads that provide a carriageway with pedestrian walkway on both sides, including space
allocated for mass transit options, this system will mainly connect specific zones such as port,
industrial areas, commercial districts and existing communities. Designed for efficient movement and
mobility.

Build secondary roads (Major Collectors) that provide a carriage way with pedestrian walkway and
cycle lanes on both sides, this is a subsidiary system to Trunk Road and links facilities to specific
zones. Designed for medium speed and compliment both access and mobility.

Build district roads (minor collector) that provide carriageway with walkways on both sides, cycle
lanes, these are local roads within facilities and zones. Designed for slow speed mainly for access.

76
Transport Strategy for Lamu
To develop a successful new city at Lamu a transport strategy needs to be developed that seeks to
reduce the need to travel by providing local employment, shops and services close to where people
live. It also needs to provide an affordable and efficient public transport system that links the township
with the key employment centres such as the Port Industrial area and the Resort City.
There are different options for the public transport system, the initial phase of the system is likely to
include a bus network, in later phases a high frequency rapid system such as Light Rail Transit (LRT)
or Bus Rapid Transit (BRT). The BRT / LRT system would operate on the routes with the heaviest
demand, and stations would be located at key nodes and bus routes serving neighbourhoods and other
parts of metropolis would connect into the BRT / LRT stations.
A comprehensive cycling and walking network along green corridors and green streets would be a
key component within a multi-modal system. Streets would give priority to non-motorised transport
modes.

The development of community transport schemes and car sharing clubs to minimise private vehicle
ownership would be encouraged.
As there is a significant industrial component to the metropolis, the development of some dedicated
freight routes could help to reduce conflict between freight and other road users.
The transport strategy should be developed in tandem with the detailed masterplan in order that they
can be effectively integrated. There are plans to develop a transport strategy for Lamu during 2017/18.

Power and energy infrastructure

Existing provision
Existing power infrastructure includes the following:
National Transmission Network
The 475km 220/400kv line and associated substations run from Mombasa to Nairobi where it will be
part of the Nairobi metropolitan ring network forming the 400KV, double circuit transmission line at
Suswa- Isinya complete with substations.
Nairobi metropolitan ring at Suswa- Ngong has 45km 220kv double circuit line and 2x90MVA,
220/66KV substation at Ngong.

Loiyangalani 430km 400kv transmission line is evacuated to Suswa to form the ring network.
Eastern Africa interconnector (Ethiopia-Kenya) -686km 500kv HDVC bipole, 400KV substation.
Phase 2 upgrade to 2000MW

77
Nearest major power stations
The nearest power station is at Rabai where the 220kv line originates.
400/220kv substation works at Mariakani which evacuates power to Isinya substation.
There is a long development pipeline of energy projects within Kenya (exceeding 5,000 MW).
Projects which come on stream will be grid connected and provide options for bringing additional
power to Lamu subject to sufficient capacity within transmission and distribution networks.

Renewable energy
Kenya is diversifying its renewable energy by expanding the production of energy through wind,
geothermal and solar.
The wind farm in Loiyangalani near Lake Turkana is expected to generate 300MW. Ngong wind farm
generates about 7.5MW at the moment with plans to expand the same to about 25MW underway.
Large scale solar energy is being considered. A few private companies have installed their own solar
energy for example like Williamson tea has installed PV in their tea farms. These operate in
conjunction with standby generators to address the issue of intermittency.
Geothermal energy production is currently delivering about 30% of the total energy nationally.

Distribution network
Linking with the national transmission network there is an existing substation at Hindi within the
study area which has a capacity of 1x23mva on 220kv line with a provision for expansion to
accommodate more circuits. The substation is currently about 10% loaded which means there is room
for expansion up to 3 more circuits of 3x23mva. This has potential to contributing to meeting the
need of part of the first phase of development.

Planned projects and improvements

There are a number of planned projects Lamu which are currently under consideration:
Proposed Amu Power project (1,000MW) is a coal power plant (368ha) which is expected to proceed
subject to environmental approvals. The project would be delivered in phases and includes upgrades
to the transmission network including a 400kv double circuit to the national grid.

Renewable Energy Projects:

Hydro power supply (700MW) is envisaged by the Tana & Athi River Development Authority
(TARDA)

78
Wind farm (90MW) is proposed at Mpeketoni area to take care of future demands

Transmission and distribution network improvements.

The transmission and distribution is being improved by KETRACO and Kenya Power as they roll out
new projects to improve the evacuation of power from their various generation centers.

Future demands
The future power demands generated from the preferred investment framework strategy are identified
in the table below.
Table 17: Power demand estimates by phase

Phase MW (cumulative)
1 75
2 632
3 1,434

The power demands by sector in each phase are identified in the chart below. Light and medium
industries are the sectors with the largest power demands.

Figure 5: Power demands by sector and phase

Power Demand (MW)

450
400
350
300
250
200
150
100
50
0
phase 1 phase 2 Total development

Logistics Food and beverage manufacture

Light industries Medium industries
Heavy industries other
Residential

The estimated power needs would require additional infrastructure as follows:

The total load for phase one is anticipated to be about 75MW. This will require 4x23mva transformer
configuration. Phase one will utilize existing spare capacity in the Hindi substation, assuming that the
project will be rolled out immediately and the available load is not taken up by other projects.

79
The total load for Phase two is anticipated to be about 632MW. Ten substations would be required
for this load, each with a configuration of 4x23mva.

The total load entire development would require about 1,434MW. This would require 20 substations
each with a configuration of 4x23mva.

Issues and opportunities

The following issues and opportunities related to power and energy infrastructure have been
identified.
The national power demand strategy is being prepared with the Kenya Government expanding the
generation of power through a diverse range of sources including geothermal, wind, hydro, solar, coal
and nuclear. The target is to have the power supply generation reach 24,000MW by 2030 with the
peak demand reaching 18,000MW, utilized through the various sectors around the country. Potential
impediments in delivering generation projects and transmission network improvements need
to be considered.

There are environmental issues with the proposed coal power plant which are currently under
consideration by NEMA. The Amu power coal plant is expected to receive approvals. However, the
financial case for the project is not known. The project may face similar challenges to other planned
grid connected power projects.

Options for captive power including Integrated Water and power project and renewable energy
options should be reviewed. Consideration of a wider range of power options is recommended to
ensure a secure and reliable source of power at cost effective tariffs at each stage of development to
mitigate the potential risks of gaps in supply, performance or infrastructure delivery.

The transmission lines are planned to be upgraded to operate at 400kv to ensure stability, resilience
and reliability.

The transmission network will form a ring in Nairobi and the same will be interlinked to the
neighboring East African countries.

It is recommended a technical and financial feasibility study is undertaken to review options for
delivering power and water serving the needs of projects and communities at Lamu.

Costs of power generation

End users at Lamu SEZ will wish to seek cost effective energy supplies and tariffs which are
competitive for their industry and increasingly for multinationals meet other corporate objectives

80
which may include environmental targets. The overall tariff costs are reflective of overall CAPEX
and OPEX costs as well as the cost of finance. An indicative comparison of various technologies is
highlighted in Table 18.

The table highlights that there is a strong financial case for exploring the feasibility of considering
gas combined cycle generation and opportunities for solar PV, wind and other technologies to serve
Lamu alongside the current pipeline of projects and to develop projects to address the needs of end
users at Lamu paying particular attention to potential large scale users.

Table 18: Comparative costs by energy generation technology

Technology Benchmark CAPEX USDm/MW OPEX USD/MW per

annum
Lower Upper Lower Upper
IWPP CCGT Gulf 0.79 0.91 Not Not
available available
Waste to energy India 0.83 1.2 27657 89885
Gas CCGT Global 0.97 - 14505 -
Geothermal (Flash) USA 1.39 6 99553 222355
Solar PV India 1.53 1.81 11063 14750
Onshore wind Europe 1.61 1.94 23000 28750
Coal UK 2.27 2.85 30600 76500
Solar Parabolic China and 3.08 4.55 44000 45000
trough India
Offshore wind Europe 4.29 6.08 100000 160000
Nuclear Global 4.8 - 72000 -
Source: World Energy Council – World energy Perspective: Cost of technologies technology costs
(2013)

Opportunity for captive power projects

As well as the overall cost of power tariffs the issue of security and availability of power (as well as
water) is a critical issue which needs to be addressed to unlock the development of Lamu Port City.
It is essential that power and water is in place in advance to enable development. There is potentially
significant coordination risk if the implementation of current power and water supply projects were
to be delayed.

81
To overcome this issue, other special economic zones projects have developed linked or captive
power projects in order to reduce dependency on other providers and uncertainty for potential project
investors.
A IWPP project is typically developed on a modular basis and can be sized depending on both power
and water needs. Either this solution could be developed to provide a secure and resilient source of
power during the early phases of development as a stop gap and then combined with grid connected
power options as projects come on line. Alternatively, it can be scaled and provide a further source
of revenue for the SEZ company.

In the case of Lamu, a SEZ authority could establish an Independent Power and Water Project (IWPP)
which would include power generation with water desalination/storage. The project could be
developed underpinned by power and water supply agreements with customers within the special
economic zone which may include oil and gas sector users and other larger power users who would
otherwise develop their own captive power projects incorporated with their facilities. Surplus or
additional power and water could be supplied to the grid or other sold to end users in the vicinity of
Lamu or distributed to other nodes along LAPSSET Corridor or the coast. The project could also be
promoted as a separate power and water project to serve the area. However, the opportunity to align
end users would be lost.

It is possible to develop a small sized facility to meet the needs of the initial phases. For example a
reverse osmosis desalination plant would require in the order of 5-10 MW of power which can be
added to the needs of the first phase (68MW) plus additional need for which there is demand.
A more representative mid-scale facility would be in the order of 500-650MW developed in phases.
This scale of facility allows for potentially reverse osmosis and multi stage flash (MSF) distillation
technologies to be deployed which could provide a more cost effective and energy efficient solution.
Much larger facilities are common in the Gulf States and Singapore in the order of 1,000-1,800 MW.
Typical capital investment costs are in the order of USD 789-910 per kW. An IWPP would require a
supply of natural gas which although non-renewable is a relatively clean, efficient and cost effective
power source. Liquified Natural Gas (LNG) could be delivered and stored with in the port industrial
area and piped to the facility. In the longer term Kenya may develop its own offshore natural gas
resources which are currently under exploration.

82
An example of a large sized facility is the Mirfa IWPP in Abu Dhabi. This project consists of a
new combined cycle gas fed power plant (1,240 MW), new reverse Osmosis desalination plant
(30 MIGD), open-cycle GT Power Plant (360 MW) & rehabilitation of existing MSF
desalination (22.5 MIGD).

Solar power
There may be potential for Lamu SEZ to develop a captive solar power facility on a temporary or
permanent basis with surplus power fed to the grid.

For example, in Malaysia the Melaka Green City Development Company promoted a small sized
8MW facility on a seven hectare site to provide power for a city expansion project feeding surplus
power to the grid. This project has a payback period of around seven years and was constructed over.

At Lamu the availability of power during daytime hours may be suitable for community use and light
industries such as apparel industries and others who do not require night time working. In addition,
there are also options for combining power storage. At present the option of including storage is
typically more expensive than grid connected power but costs are falling and expected to be in parity
within ten years.

83
Example solar power facility - Hang Tuah Jaya, Malaysia.

Next steps
The potential sizing scaling of the facility and technical and financial structuring options should be
explored in parallel with master planning and PPP feasibility studies for the port and Special
Economic zone. This will enable the potential for infrastructure bundling to be explored to find the
optimal solution. An IWPP can also serve the pipeline and in order to determine the potential for
power and water supply facilities to be financed and delivered with the Port and SEZ.

Telecommunications

Existing provision
Safaricom who is one of the leading service providers has partnered with KETRACO to link Lamu
and the entire coastal region with fibre optic line. The routing follows the power transmission line
network. This means the availability of fibre is is partly considered and can be extended to ready for
connection to customers.
Mobile masts are also being increased on Lamu Island and its environs to enhance connectivity.

Planned provision
This is as per the agreement which service providers have with KETRACO.

84
Issues and opportunities
The challenge now is the number of ready customers as the lines are available. The coastal region is
now a huge market for the telecommunication providers and is expanding.

The availability of high capacity broadband networks is required to link with power, water networks,
oil pipeline, railway, port, airport and security functions. It is critical that infrastructure is scaled as
these networks are developed normally infrastructure requires its own dedicated lines to ensure
security and resilience. Measures to ensure the cyber protection of these systems are also required.

Expansion of the mobile tower network and associated points of presence would benefit from a
connected and reliable power and broadband network to enable data backhaul, monitoring and
security of supply which is more challenging if towers are dependent on standalone power generators.

Industrial and commercial uses with potential for growth at Lamu may have requirements for high
capacity ICT connections particularly with developments in the industrial internet whereby
manufacturing systems are interconnected and linked with supply chain and logistics networks. It will
be important to consider specialised requirements within master planning.

Lamu node is to be developed as a planned and integrated city. There is greater potential than within
existing areas for the city to incorporate “smart city” components from the outset to deliver benefits
to residents, workers and visitors as well as optimise the performance of infrastructure. These
components will be addressed at the next stages of master planning.

Water supply, sewerage and drainage

Water resources and supply

Existing provision
Lamu County lacks reliable surface water resources (rivers). Current water demand in Lamu is
3,000m3/d. The following are the existing Water resources in the county:
Shella Wellfields – These have reached their limit

Lake Kenyatta Water Supply – Five boreholes serving Mpeketoni, Mapenya, Kiongwe and
Mkunumbi

The LKSS boreholes have also reached their limit

Himwa Water Supply – Located 5 km from Port. Production = 500 m3/d

Magogoni Water Supply – 30 m3/d

85
Mokowe Water Supply Project - serves a population of 5,000, including the port area. This is the
“Lamu Port Immediate Water Demand Project” commissioned in 2016

Kizingitini Water Supply Project – a desalination plant with 3.0m3/h capacity – this has been
commissioned.

Planned projects
There are several planned water supply projects which include:

Reverse Osmosis Desalinisation Plant - This project is being promoted by a private sector promoter
for a site in the vicinity of the port industrial area. The project has potential to supply around
5000m3/d. However, environmental issues and high power consumption and costs (CAPEX and
OPEX need to be thoroughly investigated against the capacity of the plant to be adopted. In addition,
it may be appropriate to review alternative locations for the project to minimise potential
environmental impacts. The opportunity for an Integrated Water and Power Project has not
previously been considered and it is recommended that LCDA explore this as a possible option.

Garsen-Lamu Water Supply Scheme – This project is proposed by the Coast Water Services Board
(CWSB). It has been identified in their Water Supply Masterplan. The intake is located on the Tana
River at Garsen. The project consists of: well intakes; raw water pumping; treatment works; treated
water pumping and transmission pipelines for both raw and treated water. The capacity is estimated
at 120,000m3/d, with an initial Phase I capacity of 40,000m3/d. The project is located downstream of
planned irrigation projects. The cost of Phase 1 is US $182m. The design is at preliminary stages and
CWSB are seeking funds for implementation. However, there is risk of a finance gap which could
delay or stall this project from proceeding.

At 40,000m3/d, Phase I Garsen-Lamu Water Supply Scheme would be adequate to supply water
demand for LAPSSET Phase I.

Grand High Falls Dam - This is a multipurpose dam by Tana and Athi Rivers Development
Authority (TARDA) aimed at providing domestic and industrial water to Lamu. It will also produce
700MW of hydro-power; provide water to irrigate 100,000ha of land and be used to regulate flooding
of the Tana River.

The water apportioned to supply Lamu demands is 106,000m3/d from Nanigi Barrage, as indicated
in the National Water Masterplan. This is a long term project to serve part of LAPSSET corridor and
Lamu with water. The project can be developed independent of the dam. Water can reach supply
areas by gravity without the need for pumping.

86
The capacity of the two projects, Garsen-Lamu and High Grandfalls Dam is 140,000 + 106,000 =
246,000 m3/d against ultimate water demand for Lamu of 280,000m3/d. At this early juncture
therefore, two strategies should be taken to ensure long term security of water supply for Lamu town,
and a portion of the LAPSSET corridor downstream of Garissa town as follows:-

Move the intake from the proposed Nanigi Barrage to a site upstream along the Tana River, to a site
to that is at least 300m above sea level to enable supply of the lower portion of the LAPSSET corridor
and Lamu town by gravity thus cutting on OPEX for the project. This will also eliminate competition
for water with the planned massive irrigation projects along the Tana River.

Negotiate with TARDA and other relevant authorities to get a higher water allocation from the
106,000m3/d (1.23m3/s) as proposed in the National Water Masterplan, to 520,000m3/d (6m3/s). This
will be adequate to serve a Lamu town and a portion of the LAPSSET corridor from Garissa to Lamu.
With the Grand Falls and Masinga Dams regulating flow in the Tana River Basin, this will be easy
to accomplish.

The cost of initial phase providing 40,000m3/d is in the region of US $315m. The potential lead in
times for planning, construction of the two dam options could be significant. In addition, previous
feasibility studies for the Grand High Falls Dam have highlighted environmental issues which would
need to be addressed satisfactorily for the project to receive support from international donors.

Future Demands
The future water demands generated from the preferred investment framework strategy are identified
in the table below.

87
Table 19: Water demand estimates by phase
Phase m3/d (cumulative)
1 14,912
2 119,808
3 279,681

From the above, the first Phase of the proposed Garsen-Lamu Water Supply Scheme of 40,000m3/d
would be adequate to serve water demands generated by Phase 1 of the planning and investment
framework. However, for phase 2 of the project to proceed additional water supply scheme options
are required as the full capacity of Garsen-Lamu Water Supply Scheme will barely be adequate. Full
development of the planning and investment framework (phase 3) would imply water demand of
280,000m3 per day which will be more than the water allocated for Lamu, which includes the 106,000
m3/d at Nanigi. It is therefore prudent to have the water allocation at Nanigi increased to 6m3/s as
indicated above.

Issues and opportunities

Action is required to de- risk the implementation of the planned water schemes. A financing study to
support implementation of the Garsen -Lamu pipeline is a priority.

To support this work it is recommended that a techno-commercial review and cost benefit analysis of
existing and potential water supply schemes is undertaken along with evaluation of additional options
which can meet the water needs of the Lamu area and wider water catchment affecting other parts of
LAPSSET including Garissa. Such a study can consider tariff structures and issues affecting the
feasibility of implementation of the options.

In addition to the existing water schemes those additional options which should be considered
include:

Desalination options. These have potential to provide water at high quality for commercial and
industrial water users and other users. The viability and affordability of tariffs will be a consideration.
In addition, electricity tariffs may influence the feasibility of the scheme. However, there is scope to
explore combined water storage to benefit from off peak tariffs as well as the option of an Integrated
Water and Power Project. The potential local environmental impacts of desalination plants (including
management of heated water, water heating) require careful site selection to mitigate potential impact
on the marine and terrestrial environment.

88
There are opportunities for Recycled water in Lamu – However, a prerequisite for any effective
recycling efforts depends on an effective sewerage system. A sewerage system therefore needs to be
implemented in Lamu before any recycling opportunities can be realised. Recycling of wastewater
will have positive effect on reduction of total water demand from conventional water sources as it
can be used for gardening and cleaning operations. Recycling of water and consideration of a separate
non potable water system within the port industrial area is recommended for consideration which may
be implemented at the project or zonal scale.

Within the planning and development guidelines for the project mandatory integration of rainfall
harvesting infrastructure should be implemented as part of the overall approach to sustainable
drainage. Rooftop harvesting is recommended as a means of augmenting water availability, and can
be very effective as Lamu experiences two rainy seasons in a year. The availability of low cost
uPVC/Plastic tanks and gutters makes it easy for individual households to install roof harvesting
infrastructure that produce clean potable water.

The strategy to be adopted for meeting water demands associated with the planning and investment
framework is likely to be to implement the first Phase of Garsen-Lamu Water Supply Scheme after
that additional water supply schemes will be required which may include a combination of
desalination/IWPP other water options including ultimately the High Grand Falls Dam project which
is identified as a strategic LAPSSET project.

Sewerage and sanitation

Existing provision
Lamu Island is currently served through pit latrines and septic tanks. There are no waste water
treatment plants at present.
Planned projects
A sewage treatment Plant is under design for Lamu Town. The main Treatment plant will be located
on the Island while a smaller treatment plant will be located on the mainland at Mokowe. The demand
that will be generated by LAPSSET was not included in the design of the ongoing sewerage project.
Future Demands
The future waste water demands generated from the preferred investment framework strategy are
identified in the table below.

89
Table 20: Waste water estimates by phase

Phase m3/d
1 11,000
2 95,000
3 218,000

Issues and opportunities

Suitable lands needs to be identified now for the treatment plant that will cater for future and ultimate
demands associated with the planning and investment framework proposals.
Some expansion of the planned facility may be possible to serve short term needs. However, a
strategic site at an appropriate location will be required for the treatment works.

Storm water drainage and coastal protection infrastructure

Existing facilities
There is no current storm water drainage or coastal protection infrastructure in place in Lamu.
Planned provision
There are no storm water drainage or coastal protection projects planned for Lamu.
Future Demands
Increased urbanisation in Lamu will increase rain water run-off as a result of an increase in hard
surfaces (buildings, roads etc.). It is not possible to model the likely run-off effects at this stage in the
planning of Lamu. Surface water drainage will therefore need to be modelled as more detailed master
planning is undertaken.

Issues and opportunities

As the detailed master planning is developed there is an opportunity to incorporate sustainable urban
drainage (SuDs) as part of a green infrastructure (GI) network. The design and management of GI
should take into account climate change and seek to mitigate this. This should include reducing and
attenuating surface water runoff and providing areas for flood retention and biodiversity.

In developing detailed design guidelines for the Lamu node, there is an opportunity to incorporate
building level SuDs such as green roofs, which help attenuate water and manage the flow of storm
water run-off.
The following issues also need to be considered in developing the approach to storm water drainage
and coastal flooding:

90
A coastal zone management approach is required.

Ecosystem based adaptation is an opportunity.

Special approaches will be required for industrial areas.

Solid Waste Management

Existing facilities
There are no formal solid waste management facilities at Lamu and waste is disposed of at a non-
engineered dumpsite approximately 1.5km from the town centre. In addition, waste collection
systems do not cover all residents. As a result littering and sporadic open burning of waste is common
practice. Some informal scavenging of recyclable materials takes place, however, no reliable data is
available to indicate how much.

Planned provision
There are currently no formal plans for future solid waste management facilities.

Future Demands
The World Bank predicts that by 2025 Kenya will have an average waste generation rate of
approximately 0.6kg per person per day of municipal solid waste12. Currently (2017) waste
generation in Nairobi is around 0.6kg per person per day. As such, it is assumed that an average of
0.6kg is representative in terms of calculating waste estimates. Table 21 below provides an indication
of the amount of waste likely to be generated at Lamu over the three phases of development.
Table 21:Municipal Solid Waste Generation Estimates

Phase 1 Phase 2 Phase 3

Population 56,776 459,599 1,102,011
Waste (Tonnes per day) 34 276 661
Waste (Tonnes per 12,447 100,667 241,338
annum)
Note – Numbers may not add up due to rounding.

In addition, there will be some commercial and industrial wastes that may arise from the proposed
industries. These are likely to be a mix of both municipal type wastes and hazardous wastes and may
be both liquid and solid wastes.

12
“What a Waste – A Global Review of Solid Waste Management”. World Bank, 2012

91
Issues and opportunities
The development of a metropolis at Lamu, will make it necessary that a formal solid waste
management system is implemented. As detailed plans are prepared for Lamu a waste management
strategy will need to be developed. The following issues need to be considered as part of a waste
management strategy:

Dedicated systems for storage, collection, sorting and management required.

Policies to reduce, recycle and manage waste.

Relevant options phased to align with current and future population to be identified.

Suitably engineered and designed treatment and disposal facilities that could reduce the reliance on
uncontrolled dumping and look, where possible, to promote waste up the internationally recognized
waste hierarchy.

Options to generate electricity to support the growth and expansion of the city.

It is possible that a waste to energy facility (WtE) could be developed to manage the projected waste
for Phase 3. This would help to reduce reliance on landfill whilst generating much needed electricity
(potentially around 15-20MWe). Only the ash from the combustion process would require disposal -
around 20% of the volume of the waste burned (approximately 48,000 tonnes per annum).
If WtE were considered then a site with sufficient space for the waste to energy facility and an
adjoining landfill should be found. The WtE plant requires approximately 6-8 hectares and the
landfill may require around 15-20 hectares (although this is dependent on the rate of fill, final height
of the landfill and the operational life of the landfill).

92
5. IMPLEMENTATION

Introduction

This section considers the implementation of the Lamu Investment Framework, by providing more
detail on four selected packages. Projects have been selected through discussions with LCDA and
other stakeholders and include:
Package # 1 - Planning and social management framework

Package # 2 - Structuring and financing the SEZ

Package # 3 - Power and water infrastructure

Package # 4 - Investment and promotion strategy

The aim is to define further the technical scope of the individual projects, and define the components
of the project that would help scale up the approach and sphere of influence. This ensures that
maximum impact is achieved through the creation of critical mass to attract interest for appropriate
funding sources. In addition to the technical component of the projects, specific consideration is given
to the investment raising strategy and potential funding streams that could be mobilised.

These should not be treated as prescriptive guidance for investment and implementation but rather as
opportunities and illustrative examples of delivery that can be applied to other projects that could
require loan, grant or land value capture mechanisms to secure completion.

It should be noted that the information provided is indicative at this stage and further studies, in
particular further feasibility studies, technical and financial structuring would need to be undertaken
to validate initial findings as presented below.

Package #1 Planning and Social Management Framework

Technical description

The development of the Lamu node at LAPSSET is anticipated to generate a population of

approximately 1,100,000 and accommodating 425,000 jobs when the area reaches the completion of
the full development phase. It is also anticipated that a large proportion of the future population will
be migrants to the area attracted by the job opportunities and facilities that the LAPSSET projects
will offer. This is clearly a significant level of development, transforming the mainland area from its
current state of limited development to a metropolis.

93
Development of such a large industrial area and supporting township in Lamu, an area that is
associated with a unique culture and sensitive environment, if not planned properly could result in
environmental degradation from pollution, change in land utilisation patterns, increased demand for
natural resources, and effects to the unique ecosystem of Lamu. It will also have significant impacts
on the existing Lamu County population that need to be managed.

Achieving the level of development that is proposed requires a detailed approach to planning and
social management in the land areas that form part of the LAPSSET Lamu node. Developing in detail
a planning and social management framework is a key priority in order to:
Clarify roles and responsibilities for planning the area (e.g. who assumes the appropriate powers for
implementation);

Provide sufficient detail and building guidelines to make informed planning decisions;

Ensure the vision and objectives are achieved;

Provide investor confidence and certainty to developers;

Ensure that businesses locating in the area will act responsibly;

Safeguard the natural environment and biodiversity;

Manage land effectively; and

Ensure the development is inclusive and successful.

The planning and social management framework includes various components which can be
packaged into three projects, each with individual components.
Project 1 – Planning Framework – Develop an institutional framework for planning the area within
the Lamu node, prepare detailed master planning for the Lamu node, develop a monitoring approach
to ensure that development is prepared in line with the adopted masterplan.

Project 2 – Environmental Management Framework – In parallel with the preparation of a

detailed masterplan, a Conservation Plan for Lamu County should be prepared, based on field survey
to map the habitats and wildlife of the area with greater accuracy, and setting out the most important
areas for formal and informal protection and restoration with wildlife corridors etc. The detailed
masterplan once prepared will need to be subject to Strategic Environmental Assessment. An
Environmental Management Plan should be prepared for specific project proposals in the Lamu node.

Project 3 – Social Management Framework – needs to be established, based on the preparation of

plans and strategies including: a community engagement strategy, a resettlement and compensation

94
plan, a security and health strategy, a corporate social responsibility policy and skills and training
programmes.

Components

Project 1 - Planning Framework

Institutional component
The crucial first step in developing the Lamu node is to establish the institutional framework for
planning the land within the Lamu node, all land outside the boundary of the Lamu node would
continue to be under the jurisdiction of the County Government of Lamu. The recommended approach
will need to comply with the legislative framework set out in the Urban Areas and Cities Act.
Establishing a Lamu SEZ planning authority, would help to achieve a co-ordinated response to
planning, that provides investors and developers with a quicker and less complex route to gaining
development approval (subject to their proposals being acceptable). Under this approach the SEZ
planning authority would be established with a decision making committee made up of
representatives from NEMA, NCA, NLC, LCDA and the County Government of Lamu. The decision
making committee would be supported by staff from each of these agencies. The SEZ planning
authority would have powers to make plans (e.g. detailed masterplans or integrated area structure
plans), approve development proposals, gather and analyse evidence in order to monitor the plans
and enforce any planning contraventions. Consultation on plan making and planning approvals would
be as per existing legal frameworks.

Proposed Framework for Planning

95
If the above option for an institutional framework for Lamu SEZ is not implemented, the County
Government would retain these planning powers, but would need to consult with agencies including
the LCDA etc.

LCDA has already prepared a human resource and organisational plan for the scale up of its
organisation. This needs to be harmonised with the preferred institutional option for planning to
consider the nature of capabilities which need to be developed along with organisational structures,
processes and procedures. The roles of other agencies and the defined arrangements for
interorganisational working should be formalised.

Master planning to elaborate the planning and investment framework including development
management guidelines.
The preferred investment strategy framework provides an initial high level indication of how
development could be planned in Lamu. However, further detailed stages of planning are required to
ensure that the vision for Lamu is properly implemented. A LAPSSET Lamu node detailed masterplan
should be prepared by LCDA and the County Government of Lamu or a Lamu SEZ planning authority
(as described above). The requirement for a concept masterplan depends on the status and
implementation of the Lamu Metropolis Plan.

A detailed masterplan would need to provide details of land use zoning, urban design, infrastructure
and transport including the road network (including reserve widths), and identify neighbourhoods,
blocks and plots, building heights and massing, and a phasing plan. If necessary, project specific
master plans could also be prepared by LCDA or project promoters.

Evidence to develop the masterplan would include a transport and freight model and more detailed
site analysis (considering land use, environmental and physical constraints and topographic features).
The land use proposals would also be informed by economic and market demand studies (refer to
Project 4).

The masterplan should be developed with a GIS system or City information model to provide an
effective management toll for ongoing planning and asset management and an effective basis to
enable an integrated planning approach.
Using these tools a computer 3D model of the masterplan would help a wider audience (including the
community and investors) visualise how the metropolis will look, acting as a promotional and
community engagement tool.

96
Development control guidelines and development parameters would be prepared alongside the
masterplan. This would define the requirements of part of the report includes suggested guidelines
that define what project developers will need to consider when executing plans for each parcel and
would include:
Access and public realm.

Industrial - building heights, plot coverage and set backs

Residential – building heights, densities

Commercial – building heights, plot coverage and set backs

Environmental management guidelines (linked to Project 2).

The masterplan should mainstream sustainable design principles to achieve resilience, this would
include:
Prioritising protection of environmentally sensitive areas and disaster prone areas;

Minimizing the carbon footprint of development (this also has the advantage of saving cost);

Design streets that encourage walking, the use of non-motorized transport and public transport, and
plant trees for shade and carbon dioxide absorption.

Integration of transportation and utilities planning within the masterplan proposals harmonized with
overall planning requirements. The effective planning and management of rights of way to
accommodate different transport modes within the city as well as management of infrastructure
following the principles of a smart infrastructure approach will be required.

97
Produce high quality public green spaces with special ecological and heritage value by highlighting
Lamu biodiversity and cultural richness, avoid the creation of heat islands, and protect the local
biodiversity and seasonal wetlands for rainwater retention and absorption.

The master planning should define a green space network strategy to identify the green
infrastructure to be protected and management and enhancement approaches as well as an approach
to new green spaces. In particular, this should establish the approach to the green buffer that is
identified in the preferred investment framework strategy. The green buffers would be appropriate for
agricultural, horticulture, forestry or recreational use with development restricted to ancillary
facilities, in order to retain the open character of these areas. `

A community infrastructure strategy should be prepared. This will define the requirements for a
range of community infrastructure facilities based on the projected population for the Lamu node,
including: kindergartens and schools; health centres and hospitals; places of worship; sports facilities
and open spaces. The level of provision should be based on national planning standards and where
necessary calibrated to local circumstances. Where there are no planning standards available, the level
of provision should be based on international best practice. The strategy should define the best
location for the facilities in order to allow people to access facilities within a reasonable walking or
cycling distance or a short journey on public transport. Land requirements and quality standards
should also be defined. The strategy will include considering how the provision of facilities would
be financed and delivered including the responsibilities of the SEZ Authority, Lamu County and other
public service providers.

98
The master plan will incorporate a transportation and infrastructure strategy. The terms of a
separate transportation study to link with the master plan are under preparation. Effective land use-
transport integration is required to harmonise proposals in preparation of the master plan.

The proposals for infrastructure planning and concept design of utility networks will be based on
design standards applicable in Kenya and where appropriate international standards and to industry
best practice. The methodologies used shall conform to the latest techniques while ensuring the use
of available materials and economic solutions. At all times, balance will be made between capital
and maintenance costs. Interrelationships between infrastructure types will be considered to enable
an integrated approach including the use of ICT enabled smart solutions and the option of a shared
utility corridor approach.

Monitoring framework
Developing a monitoring framework for planning that tracks progress against delivery of the
masterplan, vision and objectives, will be important in helping to deliver development in a manner
that is in line with the approved masterplan. Depending on the institutional arrangements for planning
in the Lamu node (see above), monitoring would be the responsibility of the SEZ authority or the
County Government of Lamu.

The monitoring framework will need a set of key performance indicators (KPIs) to measure progress
against. There will also be a need to develop data collection and monitoring processes (e.g. GIS, city
information models, or other tools) so an evidence base can be gathered on an ongoing basis to analyse
progress. The monitoring framework should also establish reporting procedures, so that there is public
oversight of progress and any corrective actions.

Project 2 – Environment Management Framework

Lamu is a biodiversity hotspot, the ecology in Lamu is widely recognised as one of the richest along
the entire coast of East Africa and its ecosystems have worldwide recognition. The County needs a
conservation plan based on field survey to more accurately map the habitats and wildlife of the area.
The conservation plan will set out the most important areas of habitats for formal or informal

99
protection and restoration. It should also set out how wildlife corridors, endangered and vulnerable
species should be protected from the impacts of development.

There will be a need to carry out Strategic Environmental Assessment (based on international
standards) of the development of the Lamu metropolis (based on a detailed masterplan) during the
construction and operation phases of development. The SEA would consider the impacts of
development at Lamu on the natural environment, habitat and livelihoods by establishing a baseline
and quantifying potential impact on terrestrial fauna, marine habitat including coral reef, sea grass
and mangroves, fisheries, pastoralists and livestock.

The SEA would need an assessment of construction activities and what effects on the natural
environment these might have e.g. sedimentation may arise from construction activities that could
affect coral reefs, mangroves and marine life.
The aim of the process is to minimise impacts from development, so the process of identifying
impacts should help to inform amendments to the proposed development. Otherwise, mitigation
actions and offsetting during construction and operation should be identified e.g. mangrove
restoration, planting mangroves, mangrove seed propagation.

There will also be need to ensure that environmental management policies are in place to ensure
industrial processes are managed to mitigate environmental harm and comply with the appropriate
environmental regulations.
A risk assessment should be carried out to identify areas of potential risk to natural disasters and
environmental hazards accounting for the future risks associated with climate change. This will help
inform where new development should be located so that it avoids areas at significant risk of hazards.
This should be used to help inform the master planning.
Effective planning of surface water drainage and flood management plan will need to be prepared
for the Lamu node. This will require integrated modelling to improve understanding of flood risk and
interaction between different sources of flooding/drought. The plan should include the identification
of high risk areas and flood mechanisms connecting sources and receptors, and an understanding of
hazards generated by different flood risk sources. This work will need to be co-ordinated closely with
the preparation of a coastal management plan that sets out policies to manage the coastal zone
including conserving nature and landscapes, maintaining or enhancing public access to the coast and
management practices.

100
Project 3 – Social Management Framework
A key priority in developing a social management framework will be for the LCDA and the County
Government of Lamu to develop a community engagement strategy, which set out how they plan
to engage local communities on the Investment Framework, planning, environmental and social
management frameworks. It will be important to undertake a stakeholder mapping exercise to identify
stakeholders (anyone who has an interest in the outcome of the development of Lamu, both those
contributing to or affected by the project), analyse the role and expectations of stakeholders and
prioritise their needs so that they can be engaged appropriately.
The community engagement strategy should develop public awareness strategy that will engage the
community through a community events programmes (work with existing Wanjiku) and through any
other appropriate means.

There is a significant area of land within the Lamu node that has been identified for settlement (e.g.
Hindi Phase I and Phase II) some land has been allocated and titles have been distributed. Much of
the land identified in the preferred investment framework strategy is community land, so the approach
to land ownership, resettlement and compensation needs to be resolved in parallel with planning for
the area. A first step will be to identify all land ownerships and leases in the area using Ministry of
Land data. A detailed resettlement and compensation plan will then be developed for resettling
those with existing land or leases, defining the approach to compensation (through land swaps or
guarantees of replacement residential / commercial premises), developing a strategy for resettlement
defining clearly the phasing and location for resettlement, and setting out the process for organising
and implementing the plan.
The LAPSSET SEZ authority should develop a
Environment
LAPSSET Corporate Social Responsibility
policy aligned with international standards, that
encourages companies that locate in the SEZ to
operate in a sustainable manner by committing to Market place Community
the following:
Economic – commit to the long term economic
growth of the local area by for example developing
and supporting local supply chains. Workplace

Environmental – commit to applying the highest

environmental standards to their business practices

101
 Social – commit to supporting the training and
development of the local community e.g. through
providing apprenticeships

The policy should require companies to provide or

help fund the provision of community facilities that
would be needed to support development of the
metropolis.

The SEZ authority / LCDA and the County Government of Lamu should develop a training
programme to enable both the existing local population and incoming residents to maximise their
potential access to job opportunities that LAPSSET Lamu node will offer. This will include:
Developing a women’s skills programme.

Tapping into national training initiatives by promoting them locally.

Develop links with ‘nearby’ university (e.g. Garissa) to develop programmes that link with the SEZ
target sectors. Accommodating higher education and vocational training facilities within Lamu
aligned with priority sectors and industries (the Kenya maritime academy is one such example of a
facility already being planned).

Mandate that medium and large sized SEZ companies adopt apprenticeship schemes targeted at the
local population.

A security and health strategy should be developed in order that the security and health issues for
the local population and those of incoming residents can be fully appreciated and planned for. The
strategy should consider the integration of new residents with existing communities, in particular:
properly planned temporary construction camps should be planned; disease prevention and health
awareness schemes should be developed; worker health screening programmes should be devised.
There will also be a need to update the security plan to align with the phased approach to development
set out in the detailed masterplan, to ensure that security measures such as local policing, coast guard
and military presence are scaled up according to the build out rates for development.

Costs and investment

The following are the likely range of indicative costs for preparing each component of the project,
the actual fee value would need to be determined depending on whether work is carried out by

102
consultants or staff within the relevant agencies, the detailed scope of work, the availability of existing
data, desired timeframes for completion and risks attached to carrying out the work.

Project 1
Indicative costs for the advisory services to develop the planning framework are:
Assist with developing institutional framework for planning including engagement associated with
master planning- $100,000 – $150,000

Prepare a concept masterplan for all phases - $1,000,000-$1,500,000. Detailed masterplan (phase 1 –
approximately 530ha) - $600,000 - $1.2m

Undertake transport studies and modelling - $600,00 - $1m

Prepare a green infrastructure strategy - $60,000 - $100,000

Prepare a community infrastructure strategy - $40,000 – $60,000

Infrastructure planning strategies - $200,000 -$400,000.

Project 2
The estimated costs for the advisory services to develop the environmental management framework
are:
Prepare a conservation plan - $100,000- $200,000

Undertake SEA for the detailed masterplan (phase 1 – approximately 530ha) - $150,000 - $200,000

Prepare a surface water drainage and flood management plan - $100,000 – $200,000

Prepare a coastal management plan - $100,000 - $150,000

Project 3
The estimated costs for the advisory services to develop the social management framework are:
Prepare community engagement strategy - $60,000 - $100,000

Prepare a resettlement and compensation plan – $60,000 - $100,000

Prepare a corporate social responsibility policy - $15,000 - $30,000

High level strategy for identification of training programme requirements - $50,000 -100,000

Prepare a security and health strategy - $20,000 – $40,000

103
Partners / Stakeholders

It has been recommended that a Lamu SEZ planning authority is established as set out above.
Assuming this agency is established, there would be a number of agencies that wold be partners in
developing the planning and social management framework for Lamu including: the County
Government of Lamu; the LCDA; the National Environment Management Authority (NEMA);
National Construction Authority (NCA); and National Land Commission (NLC).
Depending on the particular component of the projects there is likely to also be a need to involve
other ministries and agencies such as the Ministry of Lands and Physical Planning; Ministry of
Transport and Infrastructure; Ministry of Education and the Ministry of Defence. The Special
Economic Zone Authority are spearheading the development of SEZ areas and will also be a key
stakeholder.
As well as these national government agencies, there will be a need to work with others such as NGOs
like WWF and general public, local community groups and representatives.

Financial

The planning and social management projects would be funded by funds raised from government
and/ or could be part funded by IFI donor agencies.

Recovery Mechanisms and Benefits

In general it is unlikely that the funding for the planning and social management framework projects
can be recovered, there might be some opportunity to recover fees from the planning approval
process, along with service charges relating to utility and other services. The structuring of charges
would need to be compatible with provisions of the Kenyan legal framework.

The benefits of the planning and social management framework projects would be:
A coordinated approach to planning.

Best practice sustainable development principles ingrained in the development.

Greater certainty for investors and developers around what they would be able to invest in and build.

Investment associated with development opportunities identified in the masterplan.

Climate resilient development, meaning that investments are future proofed against the risks
associated with climate change.

Development that has minimised impacts on the environment and existing society and cultures.

Habitat and wildlife protected with the associated eco-system services benefits that this brings.
104
Development that manages water and flooding issues appropriately.

Gaining community ‘buy in’ to proposed development approach for the area.

Equitable approach to compensating people for the loss of their land.

Investors and businesses acting in a responsible manner with the long term interests of the area and
Kenya at heart.

Greater social inclusion and access to employment opportunities.

A more healthy and secure population.

Potential Risks

In order to successfully implement the proposed planning and social management projects, the
following risks should be considered early on in order to develop necessary mitigation measures. In
addition, there are a number of market risks and implementation difficulties which may be faced
during the implementation of planning projects. A number of these are broadly summarised below.

105
Table Potential Risks

Risks Mitigation Measures

Disagreement on the To inform the discussion Define the pros and cons of the approach,
institutional framework show examples of best practice and the impacts of failing to agree
for planning powers on an institutional framework for planning.
Make use of existing legislative powers that each agency has.
Lack of consensus on the Stakeholder mapping a community engagement strategy to be
detailed masterplan prepared.
Ensure that County Government and LCDA work in partnership to
develop the masterplan.
Masterplan is over Market test and iterate proposals.
ambitious or lacks viability
Lack of local capability to Develop an institutional framework for planning that helps make
implement the proposals use of existing capacity and enables the strengthening of capacity
where necessary.
Investors don’t invest due Undertake SEA based on international standards in parallel with
to concerns that plans are masterplan preparation to ensure environmental impacts are
environmentally damaging minimised and where necessary mitigation measures are in place.
Lack of public support for Develop a public awareness campaign that promotes the benefits of
proposals the scheme to the local and national population.
Resettlement of existing Engage early with land owners and the community to explain
land owners / lease holders compensation measures and the processes for resettlement.
is not supported

Package # 2 - Structuring the Special Economic Zone

Technical Description

The designation of a Special Economic Zone can provide a mechanism to channel activities to areas
of opportunity. In the case of Lamu it will help:
Provide an institutional mechanism to finance and co-ordinate the delivery of infrastructure.

Establish an infrastructure platform which can support the attraction of investment in productive
economic activities and the development of a city scale community;

Create a strong identity and image for Lamu that signals progression in policy development.

106
Enable provision of a wider range of economic and social infrastructure, including health and
education.

Improve competitiveness through efficiency enhancements to administrative procedures and

infrastructure development and operation.

Improves ease of investment through ease of administration and direct marketing utilising a one-stop
shop.

Effective coordinated delivery and maintenance of necessary infrastructure.

Overcome barriers to support the mobilization of international investment which may be delivered
through international business partnerships and private sector investment.

A focus of new regional development initiatives to spread the economic and social benefits of change
to the wider community.

The historical progression of policy responses relating directly to trade and industrial
change/development can be characterized in four stages:
First Stage -Free Ports and Free Trade Zones

Second Stage –Export Processing Zones

Third Stage –Special Economic Zones

Fourth Stage –Science Based Parks and Cross National Zones

The first stage of policy responses targeted the designation of land for ‘special uses’ such as Free
Ports and Free Trade Zones with bonded warehouse facilities dating back to the 16th Century. The
concept targeted enhancement of trade between countries and the relaxation of the taxation on goods
to facilitate trade.

The second stage of policy responses saw the introduction of the Export Processing Zones (EPZs)
which emerged in the late 1950s and developed over 20 or 30 years. EPZs are characterized by
industrial estate type development within a fenced boundary. Generally promoting a small number of
industrial/manufacturing processes for export related activities they also seek to attract a high
proportion of foreign direct investors and foreign companies to be involved in the process.

The third stage saw the introduction of Special Economic Zones in the 1980s which provide the
platform for a wide range of economic activities to benefit from preferential policy programmes. The
spatial areas targeted by Government reflected significant regional development initiatives focusing
on the rebalancing of activities either away from areas of high levels of congestion/development or

107
to benefit communities which had previously had limited access to opportunities within their existing
settlements. SEZs provided the basis for integrated community development rather than the focus on
encouraging singular manufacturing activity.

Kenya has recently made the shift from export processing zones towards SEZ development through
the SEZ Act 2015. Criticism in terms of benefits and creation of meaningful economic value delivered
through EPZs has led the government to freeze new investments within EPZs and gradually phase
out related incentives. Existing investors in the EPZs will eventually be required to either pay taxes
in line with Kenya’s taxation laws or relocate/re-apply to be considered for investments in the newly
formed SEZs. Lamu is one of the three pilot SEZs in Kenya, along with Mombasa and Kisumu. The
development of SEZs in Kenya is being spearheaded by the Special Economic Zone Authority.
The fourth stage, which continues to evolve today, of Science Based Industrial Parks or Technopolis
and Cross National Growth Zones extended the SEZ concept to focus on research based activities and
international cooperation as key themes.
Components

Boundary and Concept of Lamu SEZ

As noted above, traditionally key objectives of economic zones were the promotion of exports and
Foreign Direct Investment developed as fenced-in enclaves in remote areas and with a focus on
manufacturing activities. Increasingly the zone development concept has moved towards integrated,
mixed-use, large scale mega zones. These zones allow a wider range of activities, focusing on multi-
market products and not just export. They usually provide purpose built facilities and have a one-stop
shop for zone regime regulation. Prominent successful examples include Jebel Ali in UAE, Hainan
SEZ and Shenzhen SEZ.
Case Study: Jebel Ali SEZ
Technopark: 21 km², sectors: water, health,
engineering, energy, and logistics.

Dubai investments park: 23 km², mixed-use

industrial, commercial and residential complex.
Industries: building materials, food &
beverages, furniture, plastic, power & utilities,
printing press, construction, pharmaceutical,
textiles, oil.

Dubai industrial city: 55 km², sectors: food &

beverage, base metal, mineral products,

108
 chemicals, transport equipment and parts,
machinery and mechanical equipment.

Dubai world central (including: the airport,

logistics city, and aviation city):140 km²,
sectors: logistics, aviation, commercial,
exhibition, residential.

Jebel Ali port.

The proposed Lamu SEZ consisted of several separate clusters including the port, the industrial area,
a dedicated tourism area and identified areas for residential and mixed uses. These are situated close
to one another and are adjacent to the existing and designated future residential areas of the local
population.

It is recommended that a single SEZ authority is set up as to cover the development and management
of all of the clusters as a multiproduct SEZ in accordance with the Act. Experience from elsewhere
suggests that the establishment of the Special Economic Zone as one zone would be more effective
compared to the establishment of several separate zones. Key benefits include:
A single and strong administrative body for a SEZ that can promote consistent investment policy
regime and labour policy.

Greater and more diversified opportunity for potential investors.

Provision of quality infrastructure and appropriate plan and design across the area.

Flexibility for change of uses as market dictates without competition between zones.

It would be important for the zone to be developed with an explicit regional development agenda in
place, taking into account comparative advantages and requirement for jobs for the nearby
communities. Within the SEZ, the institutional arrangements would enable the development of sub
zones and projects which may be managed within the framework of the overall zone.

Ownership and Development

The development and ownership of SEZs varies depending on the role assumed by the public and the
private sectors. The following diagram illustrates various combinations of ownership and
management of assets.

109
Range of potential PPP models

LCDA is embarking on a detailed PPP structuring study for the Port and SEZ to determine the most
appropriate structure for implementing the project. Based on the consultation and review of options
undertaken as part of the planning and investment framework the option for a Government – Private
Sector Joint venture Company (ies) emerged to develop the port and associated land within the SEZ
area.
This option would allow partners to share proportionately in the revenues and risks. A key benefit
would be for the government to retain more control over the development of the land and at the same
time gain from both capital injection and commercial expertise coming from a private partner. Such
an approach has been widely used with examples provided by the Djibouti Free Trade Zone and Dakar
Special Economic Zone.

A common option could be for the government of Kenya to put equity in the form of land and the
private partner to invest in capital. The JVC would have the responsibility of development of the zone
and provision of services, infrastructure and utilities or there could be a further option of providing
infrastructure as concessions with other private entities.

The role of the County government as the existing custodian of common land was noted. The
consideration of compensation and royalty payments covering services provided by government and
the institutional interfaces between the SEZ authority, government and other parties need to be
considered in relation to the overall institutional structure.

110
Illustrative model of a simplified joint venture structure

Joint Venture
Agreement

GoK/LCDA Private Sector

Partner
Equity in the form of
land

Joint Venture
Company

Port/utility charges Rental of Service charges

land/industrial/co
mmercial Space

Cost and Investment Requirements

Before a possible public-private partnership can be considered fully, it would be important to define
the product and potential terms and conditions attached to it. It would be important to establish the
market demand that will provide a basis for investment interest, the legal requirements of such a JVC
as well as ownership and share in the losses.
It is recommended that LCDA initiates the undertaking of a detailed PPP Feasibility Study. This
would cover the following aspects:
Financial, technical and legal study.

Development of a comprehensive financial

model, with detailed assumptions and
financial analysis.

Based on the results of the study, an ideal

PPP structure can be identified.

PPP mode.

Phasing, if necessary.

Amount of government support required, if

necessary.

111
 Market sounding and stakeholder
consultations.

Preparation of the bidding documents

including the PPP contract and the output
specifications.

Launching the project for tender.

Estimated Cost $1,000,000 - $2.0m

A typical timeframe for such a JVC to come to financial close is provided below. Depending on
governmental procedures this timeframe could be extended.

- Financial Close
- Submission of post-award
requirements
- Preparation of bid
documents: RFQ, RFP - Preparation of Detailed
Engineering Design
- Marketing activities
- Preparation of detailed - Construction
- Pre-qualification
PPP Feasibility Study - Commissioning
- Qualification
- Other preparatory - Turnover
activities (e.g., market - Award
sounding)
- Governmental approvals

Time 6 to 8 months 6 to 11 months 6 month to 1 year

Roles and Partners

For Lamu there are several agencies that have differing roles in the SEZ structure:
Kenya SEZ Authority – Regulatory function to designate and regulate SEZs: Designate public and
private land as SEZs and public or private land owners or their agents as SEZ developers/ operators.
Facilitate government services e.g. licensing within SEZs. Monitor compliance.
LCDA: Conduct strategic planning. Select site(s) and package land; establish land use guidelines.
Conduct initial feasibility studies. Select developer and enter development agreement. Coordinate

112
offsite infrastructure with other concerned ministries. Training/workforce development and social
services.

Developer - Land use planning: land-use master plan for their project (consistent with a detailed
masterplan prepared by the SEZ planning authority or County Government of Lamu – see Planning
and Social Management Framework) and prepare the land accordingly (grading, levelling, and other
preconstruction activity). Provision of onsite infrastructure (roads, water distribution, water and waste
water treatment, power distribution, power generation, solid waste management. In most cases offsite
infrastructure is the responsibility of the government.

Operator (potentially same as Developer) – Facility leasing: manage lease and rental agreements
with investors and assume responsibility for main services of the zone (e.g. maintenance, security).
Utilities provision. Provision of other value added services such as business and training centres,
medical and child care services, transport, and recruiting. Marketing. The SEZ authority/regulator
and other parts of government (a national or local investment promotion agency) typically carry out
some marketing activities.

For the establishment of a Public Private Partnership, key parties involved are set out below:

Financial

The SEZ Developer generally takes on the main financial risk of the project and orchestrating its
various components during the SEZ’s development

113
From the government’s perspective to enhance the attractiveness of the SEZ to a private partner, there
are a number of enhancement investments that could be offered to shift resource/risk allocation from
the private sector and improve the terms and conditions of the transaction:

Engineering and master planning

Building of offsite and “enabler” infrastructure.

Internal basic infrastructure – notably for more developmental projects

If public sector funding is not available then the following could provide initial funding to initiate the
development:

Infrastructure development funds - A special fund created through contributions of donors, private
sources and export credits earmarked for infrastructure development, such funds are managed by an
intermediary such as a development bank, which grants funds to the Government to develop or on-
lend to developers at a margin.

Soft loans - multilateral financial institution such as the International Finance Corporation or the
Kuwait Development Fund have provided soft loans to SEZs in the past.

Guarantee facilities –Facilities such as the World Bank’s partial risk guarantee are a possibility to
provide debt funding where a sovereign back-to-back guarantee is available.

Recovery mechanisms and benefits

The involvement of the private sector can help resolve a number of issues encountered by the
government such as insufficient funds, inefficient planning and project sectors, ineffective deliver
and inadequate maintenance.
Key benefits of a JVC approach are as follows.

114
115
Table Potential risks

Key Project Risks are set out below:

Risks Mitigation Measures

Site - The risk that the site on which the Detailed study to identify site constraints from
project stands/will stand has the outset
characteristics which makes the
construction, operations and
maintenance of the project more
expensive than anticipated. These may
be due to existing assets on the site or
unanticipated geological conditions.

Design, Construction and Close monitoring and supervision of construction

commissioning - The risk that the by the public agency involved.
infrastructure being
constructed/improved does not meet the
design and construction standards set out
in the PPP contract.

Financial - The risk that the operations Feasibility study for structuring PPP and project
and/or construction of the project will finance for the project.
not be funded sufficiently.

Operations and maintenance - The risk Close monitoring by the public agency involved
that the project will not be operated and
maintained in accordance with the
standards set out in the PPP contract

Demand - The risk that the actual Detailed study to assess market and demand to
demand for the service provided by the inform the strategy at the beginning.
project is lower than the projected
demand.

Competition - Risk that a competing Consideration of comparative advantages and

facility is constructed and as a result, potential competition to be included in the
projected revenues from the project is detailed market study
not met.

116
 Regulatory - This risk that the Consultation with relevant ministries to ensure
government will enforce new regulations regulations are reflected in the PPP contract.
that will prevent the private sector from
constructing, operating and maintaining
the project under conditions
contemplated in the PPP contract. This
can also refer to the risk that the
government will not be able to enforce
regulations necessary to enable the
private sector to undertake construction,
operations and maintenance of the asset
under conditions contemplated in the
PPP contract.

Package # 3 Power and Water Infrastructure

Technical Description

Power and water supply will be crucial for development of the Lamu node. Since the power supply
is currently adequate for phase one of the development, it would be prudent to tap into this to take
advantage of the available power supply from Kenya Power. As for phase 2 various options exist to
bring grid connected power to the area requiring upgrade and reinforcement of the national
transmission network and the local distribution network.

The availability of power at competitive tariffs is an important consideration for industrial,

commercial and domestic customers. Several planned power projects ae located within the vicinity
of Lamu. In addition to existing projects additional options including the consideration of gas
combined cycle generating turbines/IWPP and additional renewable energy options should be
evaluated and addressed as part of the overall energy and utilities planning for the project. Power will
only be a challenge if the uptake of power is exceeded by the developers involved in the project. As
it is now the power is not fully utilised awaiting serious developments to take place to underpin the
case for transmission and distribution network upgrades.

There is an acute scarcity of water supply in Lamu town. This can be supplied as soon as possible by
adopting desalination of sea water which can be implemented by private companies in collaboration
117
with Lamu Water and Sewerage Company and Coast Water Services Board. However, planned water
supply projects for Lamu which are identified in the Water Masterplan for CWSB and in the National
water Masterplan should be implemented to supply future phases of LAPSSET. However, there is a
need for finance raising and exploration of options of further options for funding is required to unlock
implementation.

The long term power and water requirements for the LAPSSET project need to be addressed in order
that the Lamu node can reach its full potential. There are several options for achieving this:
Project 1 - The Tana River water dam would generate about 700MW power which will be available
for the Lamu project. This means that if the same is rolled out and put into the grid, the supply to
Lamu would be more than adequate. This is because the coal and Hydro mix will avail 1700MW to
the Lamu Port.

During construction stage continuous engagement with the power provider will be required as the
power for the site works will be required for temporary works and for permanent power connection.
Their actual requirements will be considered especially the civil works where substation and other
trenching works will be carried out to house the control switchgear.
Project 2 – Garsen – Lamu Water Supply Scheme will involve construction of an intake on the
Tana river at Garsen, raw water pumping station, raw water transmission pipeline, treatment works,
treated water pumping station, 78 km of treated water pipeline and a terminal reservoir strategically
located within Lamu town.

Project 3 – High Grandfall Dam Water Supply for Lamu - will involve construction of an intake
on the Tana river at Nanigi Barrage (it is suggested that this location be moved upstream to a location
where gravity supply is feasible), raw water pumping station, raw water transmission pipeline,
treatment works, treated water pumping station, 200 km of treated water pipeline and a terminal
reservoir strategically located within Lamu town.

Project 4 – Integrated Water and Power Plant – will involve the construction of an Integrated
Water and Power Plant. This provides both power, through a Combined Cycle Gas Turbine (CCGT)
plant which is combined with a desalination plant to provide water. IWPP can be provided in modular
form, so that the power and water capacity can be scaled up as demand increases with the phase of
development.
Project 5: Complementary on site renewable able energy options including waste to energy and
embedded renewable energy options which can be linked with project proposals.

118
Components

Project 1 will consist of the following components

A feasibility study for the specific sites will be carried out and the same will be used to address the
power requirements for the development. This will be carried out in conjunction with the architectural
master plan.

Concept design will be prepared once the architectural designs are ready and this will inform the load
demands for the project.

There will be a need to liaise with Kenya Power and the relevant bodies in the project to take care of
the power issues and to confirm the availability of the power supply.

Both Garsen-Lamu and High Grand falls schemes are still in the Conceptual Design Phase. The
following tasks are required to be carried out before development of the projects can be carried out.

Feasibility study to identifying exact locations and technical specification of the various components
of the projects and procurement model to be adopted for their implementation.

Production of engineering designs and drawings for various components of the projects – This shall
involve carrying out detailed population projections, water demand projections, project special
coverage (which may not be confined within LAPSET corridor) and production of Tender
Documents.

Carrying out environmental and social impact assessments for the project and obtaining various
clearance permits from WRMA, NEMA and other local authorities to permit construction of the
projects.

Tendering, tender evaluation and award of the contract(s)

Construction of various components of the project.

Financing and funding strategy

Cost & investment requirements

The estimated cost of implementation of Phase 1 of the Garsen-Lamu scheme is US $182m to supply
40,000m3/day. The indicative CAPEX cost is therefore estimated at US$4,550/m3 of water produced
daily.
Indicative CAPEX cost for an IWPP is US $750-875 / KW so for 1,400mw plant to meet needs for
Lamu it would be US $1b – 1.25bn.

119
Partners/stakeholders

Some of the key partners to the development are:

World Bank, IMF, USAID, UKAID, China, Bank of Africa, etc.

Some of the Stakeholders in the power sector for projects 1 and 4 are:
Kengen, who are mandated to generator electricity in the country from various sources.

Ketraco who are mandated to transmit electrical power from the substations to the load centres on
High voltage (132kv to 400kv at the moment).

Kenya Power have the role of distributing power to the consumers who are domestic or industrial

Energy regulatory Commission which deals with the tariffs of the power sector.

Projects 2 and 3 - The key partners and stakeholders for the project will be Lamu Water and Sewerage
Company and Coast Water Services Board. Project 5 could be promoted by the SEZ Company in
association with project promoters within the zone complying with regulatory standards and norms.

Financial

The likely option for financing these power and water projects is through PPP.
Recovery mechanisms and Benefits

The financial viability of the project will be considered at a later stage when designs are complete.
Tariffs for services provided would be collected from end users by the utility provider. Differential
tariffs would be structured to address different customer types.
Power and water supply agreements would be the mechanisms for establishing the terms between
parties.
Potential risks

In order to successfully implement the proposed projects, the following risks should be considered
early on inorder to develop necessary mitigation measures. In addition, there are a number of market
risks and implementation difficulties which may be faced during the implementation of the integrated
water and power project and other power and water projects. A number of these are broadly
summarised below.

Risks Mitigation Measures

120
 Lack of funding Seeking developers on the project, workshops to
encourage investors and incentives for their
investments.

Political interruptions - especially during Leaders challenged to carry out peaceful

election years when developers are slowed campaigns.
down by political temperatures in the
country

Security risk from terrorism threats Deploy sufficient security in the Lamu area.

Power demand not matching development Carry out detailed demand modelling. Remove
potential impediments to implementation
including coordination risk.

Length of water transmission pipeline may Provision of local water supplies such as
attract extra demands and thus increasing boreholes to communities encountered along
the scope of the project pipeline routes

Package #4 Investment and promotion

Technical Description

It is common for the SEZ authority to have primary responsibility for marketing and promotion, and
for investor aftercare, while a separate national investment promotion authority (IPA) performs these
roles for FDI outside the zones.
There will be a need in Lamu SEZ to develop a market targeting strategy to promote Lamu and the
LAPSSET corridor as an investment destination and identify the mechanisms necessary to deliver the
strategy.
Promotional activities can be considered to focus on the establishment of a continual flow of
investment into the host country. The process of investment promotion is broken down to identify
core components which enable the overall objectives to be achieved. The core components are:
Image Building;

Lead Identification;

Investment Generation;

Investment Flow;

Aftercare Services;

Supporting Policy Advocacy.

121
Marketing, including the timing of promotional efforts is crucial as many programmes start too early
when not much planning or development has been made on site discouraging potential future
investors who would perceive this as lack of progress.
It is also important to highlight that investment promotion is not a static strategy and requires constant
identification of leads. At a national level, according to FIAS a typical country with a reasonably
positive image and a relatively experienced IPA, an overall conversion rate of just 0.1 percent of
contacts to investments can be expected.

Components

Market and investor identification

It is critical that the development of the SEZ is market-tested and responds to investor needs. The first
step to the strategy would be to assess the economic potential and define the potential uses and
investors that could be attracted to the SEZ. This will not only inform market and promotion efforts
but is directly linked to planning and structuring of the SEZ and the investment phasing.
Furthermore, it could help identify anchor investors. Many successful SEZs globally follow this
approach in which substantial effort is put to attract specific high-profile investment at the outset that
can create a follow up network of suppliers, investors and partners.
Key elements of the market and investor targeting strategy are:
Economic demand assessment - analysis of trade data and trends.

122
Assessment of sources of comparative advantage (e.g. labour costs, natural resources, location,
market access preferences).

Trade databases and identification of target companies in priority sectors.

Government to Government proposals – engagement with partners

Private sector development proposals of IFIs.

Input from investors (e.g. interviews, surveys).

Benchmarking.

A typical timeframe for the completion of a market study is 4-6 months.

Coordination and Marketing
Following the market assessment and identification of potential investors, there will be a need to
develop a strategy for approaching investors and marketing material that will be used for promotional
purposes.
A number of materials can be prepared for this purpose and these include:
Investment prospectus

Introductory movie and physical model following the development of a detailed masterplan

Newsletters that inform about investment developments, plans and events

Market studies and project profiles.

The scale of activities to be undertaken by the SEZ authority or LCDA will influence the extent of
the human resource activities. A human resources plan will need to be defined to take into account
the anticipated levels of services based both on the scale of activities and the likely skills set required
to complete the activities at the promotional phase and also providing services to investors. Similarly
there will be a need to allocate adequate funding for all activities and services.
Coordination with other concerned agencies will be crucial. It is suggested that the development of a
market and promotional strategy is undertaken with the contribution of these agencies to allow the
smooth operation, creation of maximum impact in terms of exposure avoiding duplication and ensure
backward and forward synergies with local suppliers and networks.

It is critical that LCDA is working in partnership with other organisations:

National and International Partnering: capacity building with partner organisations e.g. KenInvest
and Brand Kenya;

Establishing links with appropriate departments in Ministries to help with investor queries;

123
Facilitation services for existing investors and development and investment services to existing
investors.

Local Business Partnering: developing matchmaking mechanisms e.g. Chamber of Commerce

Targeting Market and Aftercare services

This element involves activities related to identifying potential investors and developing a strategy to
approach them. It is a proactive effort that goes beyond the participation in events.
As a first step it is suggested that the authority organises and participates in promotional events and
campaigns in target countries in order to promote Lamu SEZ as an investment destination, focusing
on the identified priority sectors. This could be through the organisation and participation in trade
fairs and conferences.
However, it will be important to develop a lead identification approach that could proactively target
specific sectors, countries and potential investors through constant contact. This could include:
Mail & telephone campaigns

In-bound and out-bound missions

Investment seminars, both industry specific and general

Direct marketing

In addition, there will be a need to develop services to assist investors in the following areas:
Identification of potential joint-venture partners and/or local suppliers.

Business registration procedures, attain the necessary government approvals and funding packages.

Cost & investment requirements

The investment requirement will be dependent on scale of activities and services the authority will be
providing. It is suggested that LCDA proceeds with the undertaking of a market and investor
identification strategy and Investment promotion strategy that will help define potential economic
activities and investors and approach to engage and gather interest.
Typical cost: US$ 625,000 – $1.025m for strategy development plus staffing requirements for
supporting delivery of the strategy.
Partners/stakeholders

As there is already ongoing promotional activity undertaken at the national level it will be important
to coordinate and work with the following partner agencies.
KenInvest

124
Brand Kenya

Sector champions: Ministries

Chamber of commerce

Overseas representation through embassies and consulates

Financial

N/A
Recovery mechanisms and Benefits

An investment promotion strategy will define clearly potential activities for Lamu SEZ and
comparative advantages of the area providing a basis for the development of opportunities for local
employment. It will provide an effective communication across to potential investors that are
considering new production sites both from within Kenya and more importantly from international
markets. It will further help differentiate Lamu for targeted activities and signal the preparedness of
the area for investment. According to LT Wells and A.G Wind the net present value of pro-active
investment promotion is approximately $4 for every $1 spent.

Potential risks

In order to successfully implement the proposed projects, the following risks should be considered
early on inorder to develop necessary mitigation measures these are broadly summarised below.

125
Risks Mitigation Measures

Investors - The risk that there is lack - Detailed study to identify and target specific
of investors’ interest. investors.
- Appropriate material to be developed and
approach to contact potential investors.

Capacity - The risk that the agency Appropriate human resource strategy and
cannot respond to investors queries training. Coordination with national agencies that
hold information and/or are responsible for
regulations and business registration

Coordination - The risk that there is Consultation and close collaboration with
no collaboration with national relevant agencies from the beginning. Potential
agencies for secondment from national agencies to ensure
cooperation and knowledge transfer

126
Implementation Roadmap

The implementation of Lamu Investment Framework will require some immediate action on the 4 priority projects over the next 2 years. The roadmap below
identifies the components of each priority project and identifies the likely timelines for completing the work.

127
Next steps

This Planning and investment framework was endorsed by stakeholders at a launch event in Nairobi
on 7th April 2017 attended by the Cabinet Secretary representing the Ministry of Transport
Infrastructure and Urban Development and more than 100 other government and private sector and
NGO stakeholders. The event received widespread national media coverage.
The National Ministry of Physical Planning has received this plan and is formalising adoption through
statutory planning processes relating to the Lamu County Spatial plan and other supporting planning
strategies.
LAPSSET Corridor Development Authority is coordinating action to implement the Planning and
Investment Framework including the four priority packages defined to support the next stages of
implementation.

128
 Roger Savage

Euston Tower, 286 Euston Road

London, NW1 3AT

T: +44 20 7121 2980

M:+44 7082 91 5911
E: [email protected]