Kenya is advancing plans to establish a palm oil refinery and commercial plantations in Lamu County as the country seeks to reduce its reliance on imported palm oil and cut its import bill.
The proposed investment will be located within the LAPSSET Special Economic Zone, with Kenyan authorities, CPF Investment and Malaysian consultants holding discussions on the development of the refinery.
CPF Investment has identified land in Witu, Lamu County, for palm plantations that would provide raw materials for the project and support the development of a domestic palm oil supply chain.
Kenya currently imports about one million tonnes of palm oil annually, valued at nearly $1 billion (Sh129.4 billion). About 90 per cent of the imports are crude palm oil, mainly sourced from Malaysia and Indonesia before being refined locally.
The proposed refinery is expected to help Kenya retain more value within the domestic economy while creating an industrial base for supplying both local and regional markets.
The project could also create jobs, boost agro-processing and attract additional investment into the LAPSSET Special Economic Zone, which is being developed as an industrial and logistics hub along Kenya’s coast.
Malaysia is expected to provide technical expertise and palm oil seedlings as part of its growing partnership with Kenya. Malaysian Minister for Plantation and Commodities Johari Ghani said his country was willing to support Kenyan farmers and manufacturers to increase palm oil production for domestic consumption and exports to East Africa.
Kenya’s edible oil industry currently has refining capacity of about 2.1 million tonnes annually, but factories operate at only around 40 per cent capacity because of inadequate access to raw materials, according to the Kenya Association of Manufacturers.
The proposed Lamu project could therefore help address both the shortage of locally produced raw materials and the underutilisation of existing refining capacity.
Kenya’s annual edible oil demand is estimated at more than 900,000 tonnes, with imports accounting for most of the country’s consumption.
If implemented, the Lamu refinery and plantation project could strengthen Kenya’s domestic edible oil industry, create employment and position the coastal region as a centre for agricultural processing and regional exports.
