AFRICA: KENYA: Kenya's main port sees 2012 cargo traffic up 5.3%

The Kenya Port Authority (KPA) expects cargo traffic via Mombasa port, a gateway into east Africa's landlocked countries, to rise by 5.3% this year thanks to strong economic growth in the region.

The port, which is the biggest in east Africa, handles good for Uganda, Burundi, Rwanda, South Sudan, eastern Democratic Republic of Congo and Somalia, as well as Kenya, and is watched as a key economic indicator for the region.

Gichiri Ndua, KPA managing director told Reuters east African economies were growing by about 5% resulting in high consumption levels due to increased disposable incomes.

"We are likely to do 21-million tons this year ... the economic performance of the entire region is a major player of what is going on at the port," Ndua said in an interview.

"The level of importation also has a lot to do with the consumption patterns which is tied to rising incomes."

Last year, the port saw a 5.4% surge in traffic to 19.95-million tons, while containerised cargo is expected to shoot up to 840 000 TUEs, (20 foot equivalent) this year, from 771 000 TEUs in 2011.

Newly independent South Sudan was one of the key drivers of growth in 2011, after its traffic grew by 87% to 417 033 t and Ndua expects the upward trend to continue as the country rebuilds from scratch.

"Because of where they (South Sudan) are coming from, you would expect them to progressively move up ... because there is so much they need to do," he said.

South Sudan mainly imports pharmaceutical products, motor vehicles, and cargo for infrastructure development such as machinery, Ndua said.

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Analysts say the construction of a second port, Lamu, which began in March is expected to serve oil-rich South Sudan better, as well as Ethiopia, the continent's biggest coffee producer, due to a shorter linkage connection to Horn of Africa nations.

Ndua said high interest rates in Kenya had dampened investment of major capital intensive projects such as housing, with such money diverted to consumption.

Commercial banks have raised their interest rates to about 25 percent from 15 percent since October, increasing the cost of borrowing, subduing levels of imported goods, which account for about 85 percent of Mombasa port's traffic

Ndua said as borrowing costs went up, people tended to favour consumption over investment.

"In (those) circumstances, you may avoid to build houses but you buy those other consumer durables that are easy to buy such as motor vehicles," he said.

Ndua said imported motor vehicles had been on an upward trend as well as clinker and coal for infrastructure development and grains such as wheat.

Congestion, a frequent challenge for the Mombasa port due to poor off take of imported cargo, was expected to ease.

"We are at advanced stages of developing berth number 19 and it is accompanied by a storage area of about 15 acres that can handle 160 000-200 000 TUEs annually. We expect it to be done by end of this year ," he said.