PREVIEW
The government wants to revive commercial deals on state assets to raise more revenue to pay off debts
President William Ruto's government has revived a plan to concession sections of Lamu, Kisumu and Mombasa ports in a bid to raise up to US$10 billion from private investors.
That could re-open the door to a deal with Emirati logistics giant, DP World whose commercial terms have triggered political rows in the region. In 2022, Ruto's predecessor Uhuru Kenyatta had been on the brink of an agreement to run operations at the three major ports, only for the idea to be shelved following Ruto's victory in August's presidential election. This was partly due to concerns about the financial value of the leases.
The move should not come as a major surprise. The Ruto government is anxious to raise additional revenue as it faces two years of austerity measures to finance frontloaded debt repayments, and the IMF, when increasing its Extended Credit Facility earlier this year, recommended privatisation of state assets. Ruto indicated that the Kenya Ports Authority (KPA), which was the only Kenyan parastatal to make an operating profit – at $15 million – would be one of the first targets (Dispatches 14/11/22, Cutting public spending and reforming state companies, Ruto keeps $2.34bn IMF deal on track).
Lamu port is yet to become commercially viable and the government wants to offload responsibility for it. The government has invested $367m in building the first three berths at the port since it was commissioned in May 2021 but fewer than 25 ships have docked at the facility since then.
Last week, the KPA began the leasing process of nine assets, with 12 October as the deadline to submit applications.
Across the border, President Samia Suluhu Hassan's government has been forced to put on hold plans to give control of Dar es Salaam and, potentially, other Tanzanian ports, to DP World amid concerns of secrecy about the terms of the lease (Dispatches 5/9/23, Dubai faces legal hurdles with port plan).
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