Kenya and Uganda in August ended months of deliberation to sign an agreement on an oil pipeline which will cost virtually $4 billion. The process of finding the money to build it and companies to start pumping crude according to Bloomberg may be a harder task.

The 1,500-klm pipeline is crucial for exporting the region’s crude when production commences; 2018 in Uganda’s case. With the prices of oil deteriorating below $50 a bbl, there is little encouragement for companies such as Tullow Oil Plc, Africa Oil Corp., China’s CNOOC Ltd. and France’s Total SA to keep investing.

According to Razia Khan, head of Africa economic research at Standard Chartered Plc in London “The lower oil price has created a great deal more of uncertainty around future oil production, given that additional capital expenditure will be required to make oil production a reality.” 

 Before the collapse of prices, oil held great promise for both nations as a way of transforming their mainly agricultural economies and reducing poverty. Uganda, Africa’s biggest exporter of coffee; where about 38% of the population live on not less than $1.25 a day, has proven oil reserves of 2.5 billion bbl, on average with Colombia, the U.S. Energy Information Administration said. Kenya is estimated to have 600 million bbl available, but has not been verified.

From Ghana to Angola, the end of the oil boom is weakening economies in Africa as revenue slumps and currencies tank.

The planned pipeline in East Africa, which will cost about 400 billion Kenya shillings ($3.8 billion), will run from Uganda’s Lake Albertine basin through Kenya’s remote northern oil fields, to a yet-to-be-built port in the Kenyan coastal town of Lamu.

Government officials in both countries have stated that their projects are still viable.

Keith Muhakanizi, permanent secretary at Uganda’s Finance Ministry, said that the two governments will begin mobilizing resources for the project soon and he was confident they shall raise the funds.

Furthermore, the World Bank’s International Finance Corp. last year vowed to invest in the pipeline from a $600 million fund earmarked for regional economic development.