Uganda’s decision to use Kenya’s Kisumu port for fuel imports marks a major turning point in East African trade and logistics. This development aligns with Kenya’s broader vision of revitalizing Lake Victoria’s potential as a key inland maritime transport hub, especially for East and Central Africa. By partnering with Uganda, Kenya is inching closer to realizing its multimodal transport dreams that would enhance trade routes and integrate economies across the region.

Reviving the Kisumu Port

Kisumu port, strategically located on Lake Victoria, has long been regarded as a sleeping giant in terms of its potential for cargo and passenger transport. However, over the years, its infrastructure has decayed, and its role as a key maritime hub has been diminished. Kenya’s investment of millions of dollars into upgrading the port is beginning to pay off. The refurbishment of key infrastructure, including cargo ferries like the MV Uhuru, as well as the construction of fuel jetties, terminals, and berths, has turned the port into a key asset once again.

Kenya has made a concerted effort to make Kisumu a viable alternative to other regional ports, aiming to position it as a hub for inland maritime transport that serves East and Central Africa. The Kisumu port plays an integral role in the East African Community (EAC) infrastructure development plan, a larger framework aimed at fostering regional trade integration. The port is part of a $60 billion trade potential envisioned by the EAC for Kenya, Uganda, and Tanzania. Unfortunately, it only currently generates about 10% of that value for the three nations, reflecting the significant opportunity for growth.

Uganda’s recent decision to use Kisumu port for its oil and loose cargo imports serves as a critical step forward. The Ugandan delegation, led by Minister Akello Beatrice Akori, committed to using the Kisumu oil jetty for handling petroleum products. This initiative comes after witnessing the successful loading of 4.5 million liters of petroleum onto the MV Kabaka Mutebi II, bound for the Mahathi jetty in Uganda. Such moves not only solidify Kisumu’s role in the region but also underscore Uganda’s reliance on the port for crucial logistics related to fuel imports.

Strategic Importance of the Northern Corridor

Uganda’s use of Kisumu port underscores the broader strategic importance of the Northern Corridor, one of East Africa’s key trade routes. The corridor links the port of Mombasa in Kenya to landlocked countries such as Uganda, Rwanda, Burundi, and South Sudan, making it a vital artery for the movement of goods in the region. By utilizing Kisumu port, Uganda is not only diversifying its logistics options but also reducing its reliance on road transport, which can be costly, slow, and prone to disruptions. Transporting goods via Lake Victoria also significantly reduces the wear and tear on the region’s roads, improving the long-term sustainability of regional trade infrastructure.

Kisumu port’s revival also aims to tap into the growing demand for cargo movement in the Great Lakes region and South Sudan, particularly for fuel products. Uganda’s move comes at a time when fuel demand in East Africa is on the rise, driven by economic growth, industrialization, and increasing mobility. The Kenya Pipeline Corporation (KPC) is already preparing for increased operations, with plans to upgrade its systems to allow for simultaneous loading of both trucks and vessels, further increasing the efficiency of fuel distribution.

Kenya’s goal is to turn Kisumu into a vital node in the Northern Corridor, facilitating quicker and cheaper passage of goods to landlocked nations. In particular, Kenya sees Uganda as a crucial partner in expanding the port’s reach. Kampala’s commitment to using Kisumu for petroleum imports will help boost Kenya’s ambitions of tapping into the $92.3 million Congolese market, positioning the port as a key facilitator for Kenya’s manufactured goods heading to the Democratic Republic of Congo (DRC) and other countries in the Great Lakes region.

Challenges in Infrastructure Development

Despite these gains, challenges remain. One of the biggest obstacles to fully realizing Kisumu port’s potential has been the delay in infrastructure development on the Ugandan side. Uganda’s oil jetty, which is being developed by Mahathi Infra Uganda Ltd, a consortium of private investors, has yet to be completed. Once operational, the jetty will have a 14-tank storage facility with a capacity of 70 million liters of fuel and a 220-meter-long dock, making it a key asset for fuel logistics in the region. The delays have frustrated Kenya’s efforts to fully operationalize Kisumu port for fuel transshipment to Uganda and beyond.

Nevertheless, there are signs of progress. In the first half of 2024, the Kisumu port handled 125,503 tonnes of cargo, a substantial increase from 60,910 tonnes in the same period in 2023. This marks a 51.5% increase, with the port showing clear signs of growth. The number of vessel calls has also risen, with 116 calls recorded by July 2024, compared to 53 in the same period the previous year. These metrics highlight Kisumu port’s improving role in the regional logistics landscape.

Multimodal Transport Vision for East Africa

The revival of Kisumu port is part of Kenya’s broader vision of developing a multimodal transport system that integrates road, rail, and water transport to serve the East African region. Lake Victoria is at the center of this vision, offering a vital waterway that can reduce the reliance on road transport and increase the efficiency of regional trade.

The development of inland waterways, particularly Lake Victoria, is also a key component of the EAC’s Inland Waterway Transport infrastructure plan, which seeks to link Uganda, Tanzania, and Kenya to the Northern and Central transport corridors. This multimodal transport approach is seen as crucial to addressing the logistical challenges that have long plagued the region, such as high transport costs, long transit times, and congestion at key border points.

For Kenya, the success of this multimodal transport system hinges on cooperation with its regional partners, particularly Uganda and Tanzania. Kenya has been pushing for faster implementation of transport projects on the Ugandan side of Lake Victoria to complement the investments made in Kisumu. Once Uganda completes its infrastructure projects, the two nations will be in a strong position to fully exploit the potential of Lake Victoria for cargo transport.

Economic Benefits and Future Prospects

The use of Kisumu port by Uganda, particularly for fuel imports, has significant economic implications for both countries. For Kenya, it represents a key opportunity to generate revenue from port operations and related logistics services. The port is also expected to create jobs and spur economic growth in the region, particularly in Kisumu and surrounding areas. Uganda, on the other hand, benefits from a more reliable and cost-effective logistics option for its fuel imports, reducing its dependence on road transport and improving the efficiency of its supply chain.

Looking ahead, the prospects for Kisumu port are bright. The port is expected to continue growing as infrastructure development on both the Kenyan and Ugandan sides progresses. The completion of Uganda’s oil jetty and related facilities will be a key milestone, unlocking the full potential of the port for fuel logistics. Moreover, as regional trade continues to grow, Kisumu port is well-positioned to serve as a key hub for cargo movement within East Africa, particularly for landlocked nations such as Uganda, Rwanda, Burundi, and South Sudan.

In conclusion, Uganda’s decision to pump life into Kisumu port by using it for fuel imports is a major win for Kenya and the broader East African region. It reflects the growing importance of multimodal transport solutions for regional trade and underscores the potential of Lake Victoria as a key transport artery. As infrastructure development progresses, Kisumu port is poised to play an increasingly important role in the region’s logistics landscape, facilitating trade and driving economic growth across East and Central Africa.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

13th August, 2024