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Kenya Freight Transport Report 2010Published by: Business Monitor International Published: Jan. 13, 2010 - 55 Pages Table of Contents
AbstractIn October, the Kenyan government entered into talks with China over the development of Lamu Port and related road and rail links. China has been one of the most active proponents of infrastructure development in Africa over recent years, but thus far its involvement in Kenya has been limited. A delegation from Kenya was in China discussing prospects for Chinese investment in the port project, according to the Financial Times (FT). While discussions were at an early stage, the Kenyan government was hopeful that Chinese investment will provide a much-needed boost to the country's port sector. In late 2008, Kenya and Qatar were reportedly in negotiations over a US$3.5bn plan to build the port. In return for financing the port, the emirate would lease 40,000 hectares of land to be used for food production. However, no deal was ever secured, and China is now being eyed as a more appropriate suitor for the project. According to Kenyan Prime Minister, Raila Odinja, 'the Chinese offer the full package', as cited by the FT, The ‘full package’ here is in terms of expertise and financing, the latter of which would potentially come from the Export-Import Bank of China. The project under discussion, not only includes a new port at Lamu, but also the development of road and rail links to the port, for what has been described as Kenya's 'second corridor'. The development of a new port and associated infrastructure in Kenya would provide China with a route to export oil from Sudan - where it is heavily invested - and a route for its exports out of Ethiopia, which are most likely to be related to food produce.Since BMI’s last report, we have adjusted our macroeconomic forecasts for Kenya. According to our latest projections, we now estimate GDP growth of 2.5% in 2009 (up from a year-ago forecast of 1.1%) and forecast growth of 4.4% in 2010 (up from 3.3%). Kenya appears to have weathered the effects of political unrest (largely in 2008) and the international economic crisis (largely in 2009). From 2010 onwards, we see a recovery gathering pace. Average GDP growth across the extended 2010-2014 forecast period stands at 5.0%, (up from 4.3% in the preceding five years). The effect on our freight traffic forecasts for the period as a whole is therefore positive. We see road haulage expanding at a faster rate than GDP, although it will be held back somewhat by congestion. We think rail freight growth, although positive, will be no more than on a par with GDP as the new private sector railway operator continues to struggle. After a bad year in 2005, a recovery made itself felt in maritime freight handled in 2006. However, from late 2008 and into 2009, the effects of the downturn on the international shipping cycle made itself felt. Finally, we maintain optimistic projections for airfreight. Combining all these factors, our conclusion is that total freight volume across the different modes will rise by an annual average of 6.7% in 2010-2014. According to our latest estimates, transport and communications GDP rose by 1.9% in 2009. For the 2010-2014 forecast period, we expect the transport and communications sector to continue outpacing the economy as a whole. It will achieve average annual sectoral GDP growth of 5.2%, versus 5.0% for overall GDP. The total value of transport and communications GDP will rise to US$7.2bn in nominal terms by 2014, representing 8.2% of Kenya’s GDP. The transport and communications sector employed 112,000 people, or 5% of the labour force, in 2009. We see that figure rising to 130,000 by 2014, while remaining proportionately constant at 5% of the total. Road freight will continue to be a key mode of land transport and, over the forecast period, may face increased pressures from cargo switched from other sub-sectors. We are predicting that annual volume will grow by an average of 6.9% in 2010-2014. Rail freight, plagued by under-investment, has contracted, and it will take some time after privatisation before any kind of strong recovery is likely. We are forecasting average annual growth of 5.0% mn tonnes. Prospects for maritime cargo are better, with BMI predicting an annual average tonnage growth of 5.8%, with upside potential if Mombasa can become more competitive. Finally, air freight is likely to achieve annual growth of 7.5%. Get Full Details About This Report >> |
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