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KMA mulls incentives that could net Kenya billions in shipping revenue

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The Kenya Maritime Authority (KMA) is targeting to introduce incentives that could see the country share part of billions importers and exporters pay international shipping companies for their cargo.

Speaking during the 6th Association of African Maritime Association (AAMA) in Mombasa County, KMA Acting Director General John Omingo said the authority is working on a paper that will propose expansion of incentives to encourage investment in shipbuilding, repair and ownership.

“When you own a ship you can train your people to onboard your ships. You can create employment for your people and you can also share part of the money that is being paid for carrying cargo. Kenya as we are, we are paying Ksh 500 billion every year for import-export cargo. We need to create a framework that allows our people to share that money,” said Omingo.

Kenya currently accounts for less than 0.1pc of world total fleet which is dominated by Greece with a market share of 18pc of the merchant ownership, Japan and china at 11pc, Singapore 7pc and Hong Kong 5pc.

Omingo said despite some Kenyans owning ships, the vessels are registered and flagged in others countries, a factor that is blamed on Kenya’s taxation regime which has stifled investments in the sector.

Currently, local ship builders and repair firms are exempted from paying taxes on spare parts imported in the country, a move that has improved local shipping building capacity.

“When building a ship, KMA will confirm and Kenya Revenue Authority will exempt builders from paying taxes. That started last year and it is improving the situation for the ship builders. When you do that you also encourage the local ship building and repair companies to be able to pick up and be competitive in terms of attracting the order for the ships that they are building,” he added.

With billions invested in building a new port in Lamu as well as modernization of Mombasa port, Kenya could also earn billions from shipping and increase traffic along the two ports by adopting the cabotage laws in collaboration with other countries with the coming of the African Continental Free Trade Area (AfCFTA).

Cabotage allows countries that cannot maintain international networks to do their coastal shipping effectively given the high cost of owning and maintaining a shipping vessel.

West African countries have adopted the cabotage framework which has enabled maritime trade along the coastal line to thrive despite some countries not owning large international shipping vessels.