Friday, June 28,
2019 / 05:00PM / United Capital Research / Header Image
Earlier in the week, the Kenyan government signed an agreement with oil majors; Total, Tullow Oil, and Africa Oil Corp, to develop a 60,000-80,000 barrels per day crude processing facility for oil discovered in the country’s northwest region. In addition to the processing facility, a crude oil export pipeline from Lokichar to Lamu on Kenya’s coast was also part of the deal. Additionally, the country’s Petroleum and Mining Minister said the partners were now focusing on securing financing for an export crude oil pipeline.
Evidently, the East African giant plans to position itself as a crude oil exporter, joining continental majors like Nigeria and Angola. However, the closest comparable economy is Ghana, which recently transited from a Gold mining and Cocoa producing economy to an oil-producing country. Similar to Ghana where the crude oil sector now is complementing output from the mining and the Agric. sectors, Kenya will be looking to diversify its mainly Agric based economy (Horticultural products, Tea and Coffee) to an oil mining economy.
We believe this development brightens the outlook for the East African Country, which currently leads the world in mobile money. Although the proven reserves in question is relatively small, our only concern remains the theoretical Dutch Disease - the paradoxical decline in other sectors of the economy which occurs when good news, such as the discovery oil reserves, harms a country's broader economy.
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· South Africa's Mminele quits as central bank deputy governor: Daniel Mminele will retire as deputy governor of the South African Reserve Bank at the end of the month after 10 years in the job, the central bank said on Thursday, making him the third member of its policy committee to quit the regulator recently. Reuters
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