In the evolving conversation around sustainable finance and ethical investment in Africa, few projects have captured public imagination and provoked as much polarised debate as the East African Crude Oil Pipeline (EACOP). In recent weeks, protests across Nairobi and Kampala have once again thrust the project, and by extension its financiers, into the eye of a public debate that is both necessary and overdue. KCB Group, along with other local and international lenders, finds itself caught in the middle of this conversation, raising concerns about whether financial institutions should finance extractive infrastructure projects in light of climate change and mounting environmental concerns.

What has been conspicuously missing from much of the current debate, however, is nuance. The ongoing public commentary has at times veered into absolutism, suggesting that financing projects like EACOP is an automatic betrayal of environmental, social, and governance (ESG) obligations. Yet the reality of Africa’s infrastructure and economic development imperatives demands a more thoughtful conversation that acknowledges both the urgent need for economic transformation and the equally important imperative to safeguard communities and ecosystems.

EACOP: A Development Reality Africa Can’t Ignore

At its heart, EACOP is an infrastructure project designed to unlock East Africa’s oil resources, specifically Uganda’s oil fields in the Albertine Graben, by providing a pipeline link to the port of Tanga in Tanzania. Stretching over 1,400 kilometres, the pipeline is projected to create over 12,000 jobs and inject more than $2 billion annually into the economies of Uganda and Tanzania.

For Uganda, a landlocked country grappling with rising public debt and a narrowing fiscal space, EACOP is more than just an oil pipeline; it is a strategic asset designed to unlock foreign exchange inflows, finance public infrastructure, and underpin economic growth. For Tanzania, the project represents an opportunity to consolidate its strategic position as a logistics and energy hub for the region, while benefiting from transit fees, local employment, and technology transfer.

Suffice it to say, in economies where infrastructure deficits remain one of the most significant constraints to growth, projects of this scale cannot be dismissed lightly. Fundamentally, pretending that the environmental and social risks do not exist would be equally irresponsible. Environmentalists have raised legitimate concerns over the potential degradation of ecosystems around Lake Victoria, while human rights organisations have flagged issues of displacement, compensation delays, and inadequate community consultation processes.

This is the context that KCB Group and other financial institutions need to navigate even as they structure their financing models. Critically, the ongoing public debate has presented a false binary: either finance the project and compromise on ESG or reject it entirely and preserve one’s ethical standing. In truth, the more meaningful position lies in the middle, which would entail financing with firm, enforceable conditions and embedding ESG as a structural, rather than cosmetic, component of project financing.

Responsible Financing, Not Retreating

To suggest that Africa’s financial institutions should abandon critical infrastructure financing altogether is, quite frankly, to disregard the continent’s development realities. Africa faces a $100 billion annual infrastructure financing gap, with energy and logistics infrastructure at the core of that deficit. Development without the requisite infrastructure is an illusion, and refusing to participate in projects like EACOP risks ceding the space to less scrupulous financiers, often operating under weaker governance frameworks and minimal transparency.

For KCB, remaining at the table offers a more constructive and impactful opportunity: to leverage its strong pan-African foothold as a means of shaping the project’s environmental and social footprint, addressing Africa-centric concerns. Financing does not have to come at the cost of ESG standards; it is precisely through responsible funding that they can be strengthened. Withholding financing unconditionally achieves little in regions where alternative lenders with less regard for human rights or environmental protection stand ready to fill the void.

Drawing Lessons from South Africa’s Renewable Energy Programme

There is precedent on the continent for financing models that strike this balance effectively. South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is a compelling case study. While its primary objective was to fast-track private sector investment in renewable energy, the programme established stringent ESG obligations, including requirements for local ownership, job creation quotas, community development obligations, and independently verified environmental impact assessments.

Between 2011 and 2022, REIPPPP attracted over R210 billion in private investment, while creating over 50,000 jobs and channelling more than R1 billion into community development trusts. Crucially, these outcomes were achieved not by excluding financiers from potentially contentious sectors, but by embedding ESG obligations as part of the financing terms and enforcing them through independently monitored frameworks.

This model offers a valuable blueprint for EACOP financiers. Rather than disengaging under pressure, they should structure financing deals that demand independently conducted Environmental and Social Impact Assessments (ESIAs), transparent grievance mechanisms, compensation funds managed at arm’s length from project proponents, and appointment of independent environmental compliance monitors. Such conditions would not only mitigate project risks but also offer communities tangible safeguards and accountability pathways.

Charting a Nuanced Path

The protests surrounding EACOP serve as a crucial reminder that opaque, unaccountable mega-project financing is a relic of the past. But they should not deter responsible local and regional financiers from participating in critical infrastructure projects altogether. The challenge is no longer whether to finance, but how to do so in a way that delivers broad-based prosperity while protecting the rights of communities and the integrity of the environment.

KCB and its peers stand at a critical juncture. Their decisions will not only shape their reputations but also influence the broader trajectory of infrastructure development financing in East Africa. This is a moment for leadership that exemplifies how extractive financing can be both courageous and conscientious. Development goals and ESG obligations need not be adversaries; when approached responsibly, they are natural, necessary partners in Africa’s economic future.