Economy

Revolt cuts short Gaddafi’s economic march into Kenya

At the Libyan Embassy on Nairobi’s Loita Street, the green-coloured Libyan flag flaps in the wind atop the five-storey building even the wind of change in Tripoli threatens to uproot one of Africa’s longest-serving leaders.

Across the road from the embassy, a multi-million Libyan investment—the Laico Regency Hotel — stands in testimony to Col. Muammar Gaddafi’s dream of spreading his influence in black Africa. Its future, like other investments tied to the Gaddafi regime, is hanging in the balance.

Laico is the acronym for Libya Arab African Investment Company, and is one of the many investment vehicles used by Gaddafi to entrench his country’s oil wealth on the continent in return for political backing.

That Gaddafi has been courting the Kibaki government with freebies has been no secret since the President made a state visit to Libya in June 2007.

Libya had been admitted to COMESA, the Common Market for Eastern and Southern Africa in 2005, clearing ground for its eventual entry into the region.

But a bloody revolt back at home might turn this dream into an economic nightmare as Libya goes through its worst economic and political crisis since Gaddafi overthrew King Idriss on the morning of September 1, 1969.

The US government has already frozen Libyan assets, following the crackdown on Libyans demanding the ouster of Gaddafi from power.

President Barack Obama’s government fears “that (the) assets will be misappropriated by Gaddafi, members of his government, members of his family, or his close associates if they are not protected.”

The Laico Regency and the Libya Oil Kenya Limited, whose flagship is the Oilibya petrol stations, are the two best known Libyan investments that were a direct result of the $5 billion investment fund established five years ago under the umbrella of Libya Africa Portfolio for Investments (LAP).

While the Libya oil Kenya Ltd was supposed to be the distribution arm of Libya’s oil wealth to Kenya it has been reduced to be a retail outlet —pegging hopes that once the industry and fuel storage capacity improves in Kenya it would have a firm foot in the region.

Tripoli has been snapping up assets in the region. In 2008, it took over all Shell assets in Ethiopia and had hoped to build a pipeline from Eldoret to Uganda and another to supply five countries with oil products from a Ugandan refinery.

Gaddafi combined this commercial entry with politics and was able to use his influence to purchase choice service stations in 2007 when Mobil Oil Kenya wished to sell its assets.

It was then that Tamoil Africa Holdings Limited, which is fully owned by the government of Libya through the Libyan-African Investment Portfolio (LAP), bid to acquire downstream assets of the American company, ExxonMobil.

These included the Mobil’s network of 64 retail service stations, a blending plant for lubricants in Mombasa, the aviation business, terminals at Mombasa and Nairobi and fuel depots in Nakuru, Eldoret and Kisumu.

A year earlier, Tamoil had signed an agreement with the ministry of energy in which Libya was to provide Kenya with petroleum products at concessional rates.

A later agreement signed by Kibaki and Gaddafi included the opening of direct air transport between the two countries and the formation of a Joint Commission for Bilateral Co-operation.

From June 2007, when Mr Kibaki made a State visit to Libya, its diplomats caught the ear of the President whenever he went for AU meetings.

With this closeness, Kenya was hoping that it would be able to tap into US$.5 billion investment plan that Gaddafi’s had put aside for Africa.

Among the projects that Mr Kibaki discussed with the Libyan government are the Tamoil undertaking, the upgrade of the Kenya Oil Refinery and construction of a Liquefied Petroleum Gas import storage and distribution facility in Mombasa.

Agreement’s fate

It is not clear what will be the fate of the agreement that Kenya signed with the Libyan Government.

The most significant for the business community was the trade agreement in which Libya and Kenya agreed to grant each other most favoured nation treatment in all matters relating to customs duties.

The foray into Libya came shortly after the Narc party victory when Mr Kibaki’s nephew, the late Alex Mureithi, visited Tripoli in mid 2003 as a special envoy.

While details of this visit and its implications on future Kenya-Libya relations are hazy, it telling that Mureithi, who was to become the Managing Director of Tana and Athi Development Authority, was a confidant of Mr Kibaki —who said as much at his funeral in Nyahururu.

The Libyans, or rather the Gaddafi network, had lofty dreams on Kenya since it was the largest economy in the eastern Africa region.

Initially, the Libyan African Arab Investment Company had shown interest in setting up a 5-6 Star hotel in Nairobi, but the Grand Regency sale came at the appropriate time, sparking a national row on how the Libyans bought the hotel.

The Governor of the Central Bank, Prof Njuguna Ndung’u, was to tell a commission that was investigating the sale that the government offered the hotel to the Libyans without tendering.

Grand Regency was a public property and its sale should not have been shrouded in any secrecy whatever value it was given. But it was.

A conference centre in Mombasa that was also in the pipeline never materialised as the Libyans were caught in the Grand Regency pricing row that saw then Finance Minister Amos Kimunya step aside.

It was the cultural cooperation that was pushed by Gaddafi that has seen some “elders” led by Kamlesh Pattni visit Libya.

Before the revolts across the Arab countries, Kenya and Libya’s diplomatic manoeuvring was in full swing, with Kibaki sending vice-president Kalonzo Musyoka to go and lobby Tripoli to support Kenya’s efforts at the African Union (AU) to defer the post-election trials at the International Criminal Court (ICC).

The ICC is set to rule this month on the application by ICC prosecutor Louis Moreno Ocampo to have six Kenyans tried at the Hague over their suspected roles in the post-election violence.

Rebel movements

Thus while the US$.5 billion investment plan in Africa was widely pronounced, it masked the political agenda of Gaddafi in Africa after he decided to abandon the 1970s and 80s ideological goal of supporting rebel movements in Africa to working with existing governments.

Libya had for many years been locked out of the Kenyan market after Gaddafi fell out with former President Moi in 1986, which led to the closure of the Libyan Embassy and jailing of several University of Nairobi student leaders whom Moi accused of espionage.

Years earlier, the Libyan Embassy and the Jamahiriya News Agency (JANA) had started a short-lived Libyan-backed publication, the Voice of Africa, in early 1980s whose critical analysis of Kenyan politics and personalities saw it closed.

With no love lost between Libya and Moi (the latter believed that Gaddafi was training rebels in Uganda and Libya), Kenya cut all diplomatic ties with Libya and threw out the Ugandan envoy.

By that time, the global isolation of Gaddafi had started after the 1979 bombing of Pan AM Flight 103 over Lockerbie, Scotland.

Libya had also been designated a state sponsor of terrorism.

It was not until Kibaki took power that Kenya started courting Libya for economic support as Western countries continued to withhold aid after the emergence of the Anglo-Leasing scandals.

Kibaki turned to China, Qatar, Libya and Japan where he signed several bilateral agreements.

With the revolt gaining momentum, the fate of Libyan investment pushed to African nations will have to take a beating.

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