East Africa gets $16bn refinery boost as Lamu project targets

East Africa’s drive to reduce dependence on imported petroleum products has received a major industrial boost with the groundbreaking of a $16 billion oil refinery and petrochemicals complex in Lamu, Kenya, as the project targets 700,000 barrels per day of refining capacity and up to 60,000 direct and indirect jobs.

President William Ruto and President and Chief Executive Officer of Dangote Industries Limited, Aliko Dangote, broke ground for the project on Wednesday, with the complex expected to become a major energy and manufacturing hub serving Kenya and other East African markets.

The investment, estimated at KSh2.2 trillion, will include a refinery capable of processing 700,000 barrels of crude oil daily, a 1,000-megawatt power plant and petrochemical facilities for products including plastics, fertiliser and chemicals. Kenya’s Special Economic Zones Authority described it as a major investment in local value addition and industrialisation.

Dangote said the project would be developed from experience gained from constructing and operating the Dangote Petroleum Refinery in Lagos, with construction expected to take about 40 months.

The project is designed as a regional rather than purely Kenyan investment, with its products expected to serve markets including Kenya, Uganda, Rwanda, Tanzania, Ethiopia, South Sudan and the Democratic Republic of Congo.

Its economic significance extends beyond fuel supply. By combining refining with petrochemical production and large-scale electricity generation, the complex is expected to create opportunities for manufacturers, logistics operators, engineering companies, suppliers and other businesses around the industrial zone.

Dangote also plans to make 30 per cent equity in the refinery available to East African governments, potentially allowing regional states to participate in the value created by the project. However, Uganda’s President Yoweri Museveni said at the groundbreaking that his government would not take a stake because Uganda intends to proceed with its own refinery project.

For Kenya, the project could also strengthen the strategic importance of Lamu Port and the Lamu Port-South Sudan-Ethiopia Transport corridor by creating an industrial anchor around which energy, transport and manufacturing investments can develop.

Ruto said the refinery is expected to generate about 60,000 direct and indirect jobs, while the construction phase alone could inject more than KSh2 billion a month into the local economy through wages. The spending would support shops, hotels, restaurants, transport businesses and housing providers in Lamu and surrounding communities.

Dangote said the company would prioritise local participation, including technical and vocational training for young people and opportunities for local businesses to become suppliers. The group also plans to establish an engineering training school in Lamu.

The project comes at a time when disruptions to international oil supply routes have exposed African economies to sharp swings in fuel prices and availability. By increasing refining capacity within the continent, the investment could reduce the region’s exposure to imported refined products and strengthen energy security.

The industrial complex will also create a larger domestic market for African crude by linking production to processing and manufacturing instead of exporting crude oil and importing finished petroleum products.

However, the project faces execution and community challenges. A Kenyan court recently ordered the parties in a land dispute to maintain the status quo, although Dangote said the legal action would not stop the groundbreaking and that construction would proceed while the dispute is addressed.

The Lamu development therefore represents a major test of Africa’s capacity to finance and execute large-scale industrial projects within the continent. If completed as planned, it would expand East Africa’s refining capacity, deepen regional trade and create a broad industrial ecosystem around energy, manufacturing, logistics and skills development.