Kenya’s Mombasa port may handle 5 percent more cargo this year and construction of a second container terminal at East Africa’s busiest seaport is running ahead of schedule, according to the state-run harbor authority.

Throughput may climb to 23.5 million metric tons in 2014 from 22.3 million tons last year as a result of “an improvement of economic performance,” Managing Director of Kenya Ports Authority Gichiri Ndua said in the capital, Nairobi, on Aug. 20. Tonnage rose 13 percent to 11.9 million tons in the six months through June from a year earlier, Ndua said. The port also handles trade for landlocked Uganda, Rwanda, South Sudan and the Democratic Republic of Congo.

The first phase of building the container terminal to handle 450,000 twenty-foot equivalent units, or TEUs, a year is two-thirds complete and the facility will probably be ready by the middle of next year, ahead of the March 2016 goal, he said.

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Kenya’s port is facing competition for customers from neighboring Tanzania, to the south, where the government is investing to upgrade the main Dar es Salaam facility and building a new port north of the commercial hub in Bagamoyo.

It takes 3.2 days to 3.5 days for shipments to pass through Kenya’s port, down from 18 days last year, after an reorganization of the systems and management, President Uhuru Kenyatta said in June. Kenya is building another international port in Lamu, north of Mombasa near the border of Somalia.

The second container terminal being developed in Mombasa will be expanded to handle 1.2 million TEUs. The existing container facility processed 894,000 TEUs last year, from 903,000 in 2012, amid uncertainty as the country held its first national elections since 2007, when violence after the polls left more than 1,100 people dead and displaced another 350,000.

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Security Risks

The port city is facing increased security threats, with the U.K. government closing its consular office there this year. Britain, the U.S. and other states are advising travelers against non-essential visits to the city over “terrorism” threats. The city, also a tourist hub, is one of the places in Kenya that has suffered gun and grenade attacks in recent months, which the government has blamed on al-Qaeda-linked militant group, al-Shabaab, and local political disputes.

Imports handled by the Mombasa port increased 12 percent to 10 million tons in the first half of this year, exports climbed 14 percent to 1.7 million tons and transshipments, or cargo that changes vessels at the port, rose to 106,000 tons from 72,000 tons. The increase follows the opening of a 19th docking station last year and the completion of dredging that allows the terminal to handle larger vessels, according to Ndua.

Economic Expansion

The International Monetary Fund forecasts Kenya’s gross domestic product will increase 6.3 percent this year and next.

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Export-Import Bank of China will help finance construction of a 600-kilometer (373-mile) rail line joining Mombasa and Nairobi that will begin in October and be completed in 42 months. The link will be extended to Uganda, Rwanda, Burundi and South Sudan.

Currently, more than 90 percent of cargo is ferried by road from Mombasa because transporting goods on an existing single-track railway built by the former colonial power Britain in the 19th century can be slow and inefficient.

Source URL: Bloomberg Business Week

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