Kenya is turning to private investors to help develop and run two key seaports along the Indian Ocean, in a bid to stay competitive amid growing regional rivalry.
- Kenya is seeking private investors to develop and operate two seaports in Mombasa and Lamu along the Indian Ocean.
- The government aims to use public-private partnerships to fund the port projects due to a lack of financial capacity and to reduce dependence on external debt.
- The country plans to offer infrastructure bonds to attract long-term investments from pension funds and insurance firms for the port developments.
Kenya is turning to private investors to help develop and run two key seaports along the Indian Ocean, in a bid to stay competitive amid growing regional rivalry.
According to the Treasury’s website, the government is seeking advisers to structure public-private partnership (PPP) deals for port projects in Mombasa and Lamu.
The Treasury noted that the Kenya Ports Authority lacks the financial capacity to undertake the developments independently and that tapping into private capital is critical to easing dependence on external debt.
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In 2023, Kenya submitted proposals to lease parts of the Mombasa and Lamu ports to private operators, to generate at least $10 billion annually by 2030.
Kenya is now leaning into public-private partnerships to fund major infrastructure upgrades, as it navigates mounting debt concerns flagged by the International Monetary Fund. With limited fiscal space, the government is banking on private capital to deliver large-scale projects like ports, roads, and airports, Bloomberg reported.
Strategic port expansions
To expand its maritime capacity, Kenya will offer infrastructure bonds to attract long-term investments from pension funds and insurance firms.
These funds will help finance the construction of new berths at Mombasa and container terminals at Lamu, with the Treasury projecting a three-year timeline to reach financial close.
The Mombasa port is the biggest port in East Africa and the only international port in Kenya. The port is a transit route for mainly, Uganda, Rwanda, South Sudan and Northern Tanzania. Lamu, which came online in 2021, is strategically positioned to handle cargo for Ethiopia and South Sudan.
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Kenya’s port activity has surged over the last decade, with cargo throughput rising to 41.1 million tons and container traffic doubling to 2 million twenty-foot equivalent units. Planned upgrades include rehabilitating berths, enhancing container terminals, and dredging to allow bigger ships.
Under the proposed concession model, a private operator will take full charge of the Lamu terminal and three berths, following a model adopted by regional peers like Tanzania, Djibouti, and Somalia.
