When Nigerian industrialist Aliko Dangote began looking for a home for his next mega refinery, many people expected Tanzania to win the race. The country had already featured prominently in regional discussions about establishing a large oil refinery to serve East Africa. Its coastal location and growing energy ambitions made it a strong contender. However, after months of evaluating different options, Dangote turned his attention to Kenya instead.
Today, Dangote Industries is pushing ahead with plans to build a 700,000-barrel-per-day refinery in Lamu, a project that would become the largest refinery in East Africa and the company’s biggest investment outside Nigeria. The decision was not based on chance. It was shaped by economics, geography, infrastructure and long-term business strategy.
Here are the five key reasons Kenya came out on top.
1. Kenya offered a larger and more reliable fuel market
Every refinery needs customers. Building a facility capable of processing hundreds of thousands of barrels every day only makes financial sense if there is strong demand for the products.
Kenya presented a stronger commercial case because it has one of the largest economies in East Africa and consumes significantly more petroleum products than most of its neighbours. Fuel is needed to power industries, transport goods, support aviation, generate electricity in some areas and keep millions of vehicles on the road every day.
Dangote himself acknowledged this advantage when explaining his preference for Kenya. He noted that Kenya has a bigger economy and a larger market for fuel consumption, making it easier for the refinery to sell a substantial portion of its output before even looking at export markets.
That steady domestic demand gives investors greater confidence that the refinery will remain profitable even during periods when international fuel markets become volatile.
2. Kenya sits at the centre of East Africa’s fuel trade
Location matters just as much as demand.
Kenya has spent decades building itself into East Africa’s transport and logistics hub. Every day, fuel imported through the Port of Mombasa is transported to Uganda, Rwanda, South Sudan, Burundi and the eastern parts of the Democratic Republic of Congo.
Although Dangote has now selected Lamu as the preferred site instead of Mombasa, the refinery would still benefit from Kenya’s established transport corridors. Lamu is part of the ambitious LAPSSET Corridor, which is designed to connect Kenya with Ethiopia and South Sudan through highways, railways, pipelines and a modern deep-sea port.
For a refinery, this means products can reach multiple countries quickly without the need to build an entirely new regional distribution network. That saves both time and money while expanding the number of potential customers.
3. Modern port infrastructure tipped the balance
Oil refineries depend heavily on ports because crude oil arrives by sea, while refined products are exported using the same route.
During earlier discussions about the project, Dangote said he preferred Kenya because its port infrastructure could better accommodate very large crude carriers. Larger ships reduce transport costs because they carry more oil in a single voyage.
The planned refinery site in Lamu strengthens that advantage even further. Lamu Port was built with future expansion in mind and is capable of supporting major industrial developments. Unlike older ports that often struggle with congestion, Lamu still has room for growth, allowing space for storage terminals, petrochemical industries and future energy investments.
For a project expected to process 700,000 barrels every day, efficient shipping infrastructure is not simply an advantage. It is a necessity.
4. Kenya demonstrated stronger investment readiness
Large infrastructure projects require more than money. They also depend on government support, regulatory certainty and timely approvals.
Dangote Industries has already confirmed that the refinery site has been identified, soil testing has begun and engineering work is underway. That level of progress suggests discussions between the company and Kenyan authorities have advanced beyond preliminary negotiations.
Kenya has also spent years positioning itself as an attractive destination for foreign investors through infrastructure development, improvements in transport networks and policies aimed at encouraging private sector participation in major projects.
While Tanzania continues to attract significant investment across different sectors, Kenya appears to have convinced Dangote that it could move the refinery project forward more quickly and provide the conditions needed for such a complex undertaking.
5. Kenya fits Dangote’s long-term vision for Africa
The proposed refinery is about much more than supplying fuel to Kenya.
Dangote’s ambition is to build an African energy network that reduces the continent’s dependence on imported refined petroleum products. His Lagos refinery, which began operations in 2024, has already started exporting fuel to several African countries and is gradually changing regional fuel trade patterns.
A second mega refinery in Kenya would extend that strategy into East Africa. It would allow Dangote Industries to serve growing markets across the region while taking advantage of Kenya’s strategic position on the Indian Ocean.
The project also comes at a time when East African countries are experiencing rapid population growth, expanding cities and rising demand for transport fuels. These trends are expected to continue for decades, creating a market that is likely to grow rather than shrink.
For Dangote, Kenya is not simply another investment destination. It is a gateway to one of Africa’s fastest-growing regions. If construction proceeds as planned, the refinery could reshape East Africa’s energy landscape, create thousands of jobs, strengthen Kenya’s role as a regional logistics hub and reduce the region’s reliance on imported fuel from outside the continent. That combination of market size, infrastructure, geography and long-term opportunity explains why Kenya ultimately succeeded where Tanzania did not.
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