Kenyan port authority may go to market for development funds

Mombasa — The Kenya Maritime Authority is in talks for a debt sale that would finance a commercial shipping line to tap into growth in a region preparing to become an oil exporter.

The bonds may be offered on the Nairobi Stock Exchange, director-general Nancy Karigithu said in an interview in the port city of Mombasa on September 30, without giving details. The regulator is trying to build capacity to take advantage of demand in East Africa, a region set to grow 6.6% this year, faster than the sub-Saharan African average, according to the International Monetary Fund (IMF).

“Training marine engineers to international standards is very expensive and we have been struggling without our own ships,” Ms Karigithu said.

Kenya and neighbouring Uganda are developing oil fields and investing in infrastructure to meet the needs of their economies. The governments are recruiting contractors for the construction of an oil pipeline scheduled to be completed by 2018, and Kenya, which has a $55.2bn economy, is planning a port in Lamu, 240km north of Mombasa.

“Increasing offshore oil exploration and the development of another international port in Lamu are accelerating the need for enhanced maritime capacity,” Ms Karigithu said.

Kenya, which shares Lake Victoria with Uganda and Tanzania, wants to reach out to Uganda to develop cheap trade routes and a ship-building industry on the lake, she said. Moving goods between the countries out of the Mombasa port would sustain the industry, she said.

The East African Community, a five-member group that includes Rwanda and Burundi, is forecast to expand 6.7% next year, while sub-Saharan African output is set to grow 5.4% this year and 5.5% next year, according to the IMF’s April regional outlook.

The authority joins companies including CIC Insurance Group and Shelter Afrique that are planning to sell debt in Kenya after the government issued the country’s first Eurobond in June, selling $1.5bn of notes at a coupon of 6.875%. Yields have fallen 79 basis points since they were issued to 6.09% at 12pm in Kenya’s capital, Nairobi.

Kenya’s port of Mombasa is the largest in East Africa and serves landlocked countries including Uganda, Rwanda and South Sudan, along with eastern Democratic Republic of Congo.

Source: http://www.bdlive.co.za/africa/africanbusiness/2014/10/02/kenyan-port-authority-may-go-to-market-for-development-funds