What scrapping maritime agencies means for industry

Three maritime agencies - Kenya National Shipping Line, Lapsset and Kenya Fish Marketing Authority - face the axe in new State reforms targeting parastatals.

According to the government, the move is necessary to power State efficiency and cut costs.

However, experts warn that scrapping these three entities, which are crucial for the development of the blue economy, could be a bad road to take.

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According to a State official who sought anonymity because of the nature of his work, scrapping the 30-year-old KNSL, which the Jubilee government tried to breathe life into in 2018, would kill the vision to make Kenya a regional transhipment hub.

Previously, KNSL enlisted the Mediterranean Shipping Company (MSC) as its global partner. In a deal signed in 2018, MSC was to employ a total of 56,000 Kenyan seafarers trained at the Bandari Maritime Academy (BMA).

MSC has a 33 per cent shareholding in KNSL, while Kenya Ports Authority (KPA) has 53 per cent.

The State official also said BMA was on its knees following reduced funding from the exchequer.

“The policymakers do not understand what the blue economy is,” said the official.

“Dubai port is marked as the gateway to Africa. The blue economy dream was to make Mombasa a hub port, but this vision seems to be fading away with the plan to kill KNSL.”

On fisheries, he said KFIC was established to make Kenya a fish processing hub with the potential to annually generate Sh100 billion, Sh12 billion in taxes and create 60,000 jobs.

Data from the department of fisheries show Kenya is home to 25 per cent of the global tuna; it is expected to land over two million metric tonnes a year valued at Sh1 trillion, up from the current annual landing of 1,500 tonnes valued at Sh300 million.

Illegal fishing for yellowfin, skipjack, and bigeye tuna is still going on 20 nautical miles (37 km) from the Indian Ocean and beyond despite the establishment of the Kenya Coast Guard Service.

Former Seafarers Union of Kenya general secretary Stephen Owaki said the government’s decision to dissolve the maritime agencies is ill-advised.

Mr Owaki wondered why the government has always bailed out Kenya Airways, a national carrier, but has neglected KNSL, which should be hauling all government cargo.

He noted that since the government signed memoranda with MSC, more than 4,500 seafarers have been employed on foreign vessels.

‘’While Kenya is considered a maritime nation due to its huge coastline, lack of strong maritime agencies could kill the blue economy,’’ said Francis Joseph, a clearing and forwarding agent at the Port of Mombasa.

Maritime expert Andrew Mwangura said the dissolution of the key maritime institutions marked a significant shift in Kenya’s aspiration to achieve maritime nation status.

Mwangura said the decision would have far-reaching economic consequences for the nation’s blue economy.

‘’For example, KNSL, despite its operational challenges, served as a crucial sovereign asset in international maritime trade,” Mwangura said.

“Its dissolution leaves Kenya without a national carrier at sea, forcing reliance on foreign shipping lines and surrendering control of shipping costs and routes. This marks a loss of autonomy in maritime trade.”

He said Lapsset is particularly a major concern to the industry, as the agency is pushing for the implementation of key transport infrastructure to serve Lamu Port worth about Sh2 trillion.

This includes the construction of a highway linking Lamu port and the market, which is set to be completed this year, a pipeline, a refinery, a railway, airports, and resort cities along the corridor. Lapsset is actively promoting the new transport corridor market that includes Ethiopia and South Sudan.

‘’This ambitious project, connecting Kenya to South Sudan and Ethiopia through a network of ports, highways, and railways, is poised to transform regional trade dynamics in the region,’’ he stressed.

Mwangura noted that the corridor’s potential to generate up to two per cent of Kenya’s GDP through improved connectivity and trade facilitation now hangs in the balance.

He said further that the economic implications include lost investment opportunities estimated at $24 billion (about Sh3 trillion) and over 500,000 jobs that were to be created.