Kenya racks up Sh200b shipping bill in three years

Kenya has incurred maritime transport costs amounting to Sh200 billion since 2014.

This is because the country lacks a robust commercial shipping fleet, a Government official has said.

Maritime and Shipping Affairs Principal Secretary Nancy Karigithu said the costs could have been avoided had the country invested in its own shipping fleet.

“Our blue economy is in tatters because we lack investors who could help develop a shipping line for commercial services. The losses incurred because of absence of investment in shipping are enormous,” said Ms Karigithu in an interview.

On top of the transport costs, Karigithu explained, the country last year suffered $22.6 million (Sh2.3 billion) in demurrage costs on oil imports.

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Demurrage is the charge payable to the owner of a chartered ship in respect of failure to load or discharge the ship within the agreed time.

The losses come as Kenya’s peers in the region continue to make admirable investments in shipping and are making extra cash by hiring out their fleet.

Ethiopia Shipping Line (ESL), for instance, is earning the country $40 million (Sh4 billion) annually from its fleet of 18 commercial ships.

“Seychelles through the Seychelles Petroleum Company (SEYPEC) also imports all its petroleum products aboard its own ships,” noted Ms Karigithu.

The PS said the reason there is little investment in shipping in Kenya is because the country lacks a robust legal framework and maritime law enforcement capability to govern the sector.

“I am sure many investors own ships, but register them in foreign countries. This is because the maritime sector in other countries is much more developed and properly governed than here,” she said.

The PS also explained that much has to be done to discourage the export of maritime services such as container cleaning and repair as well as insurance which cost the country Sh1.7 billion annually.

Insurance services have so far been domesticated after Treasury last year directed importers to insure with local underwriters.

The new marine policy covers loss or damage of ships in transit and goods from their point of origin to the final destination.

Ms Karigithu said main cargo imports would shoot to Sh30 billion by 2020, which will translate to good business for insurers.