OPINION | Need for an open international ship registry to reposition Kenya’s maritime industry

A tug-boat directing a cargo vessel to a berth at Mombasa Port. PHOTO/FILE

By ANDREW MWANGURA

newshub@eyewitness.africa

Kenya’s maritime potential remains largely untapped, despite the nation’s considerable strategic advantages and access to key international shipping routes.

With only 25 merchant vessels registered under the Kenyan flag in 2020—out of 1,849 ship visits to Kenyan ports that year—it is clear that Kenya is missing out on a significant opportunity for economic growth and regional leadership in maritime affairs.

Currently, around 28 merchant ships owned by Mombasa-based companies are registered under foreign flags of convenience, while another 11 bulk carriers are similarly flagged abroad.

This widespread practice results in a direct financial loss to Kenya—an estimated Sh 1.2 billion annually in tonnage fees alone. These fees, if retained, could be reinvested into improving the country’s maritime infrastructure, training its workforce, and bolstering its international standing.

This issue highlights a critical challenge: the lack of a competitive domestic registry that attracts vessel owners to register under the Kenyan flag. While global open registries such as Panama, Liberia, and the Marshall Islands dominate, Kenya remains relegated to the periphery of this highly lucrative sector.

The international merchant fleet currently comprises over 100,000 vessels, with total deadweight tonnage exceeding 2.1 billion tonnes. Kenya’s exclusion from this network means it forgoes significant opportunities for both economic growth and regulatory influence.

Furthermore, specialized sectors within the maritime industry present unique opportunities for growth, including offshore oil and gas fleets, offshore supply vessels (OSVs), and the cruise industry.

With East Africa’s offshore energy exploration on the rise, Kenya has the potential to become an attractive registry for Floating Production Storage and Offloading (FPSO) units—of which there are approximately 175 worldwide.

Similarly, the global OSV fleet, which supports offshore energy production, numbers over 3,000 units. Establishing a competitive registry for these specialised sectors would position Kenya as a maritime hub in the region, providing both commercial benefits and employment opportunities.

The cruise industry, despite recent setbacks, continues to expand globally. With an estimated 270 ocean-going vessels, this sector could also benefit from a Kenyan registry offering competitive rates and a strong reputation for safety and sustainability.

The creation of an International Open Ship Registry (IOSR) would mark a transformative shift in Kenya’s maritime policy. Such a registry would not only generate immediate revenue but also serve as a catalyst for long-term development, positioning Kenya as a regional maritime leader.

Beyond financial gains, an IOSR would stimulate job creation, strengthen maritime governance, and enhance Kenya’s standing in international maritime bodies.

However, to make this vision a reality, Kenya must address several key challenges. First, it needs to offer more competitive financial incentives. Shipping tax havens and tax holidays could be introduced to make registering under the Kenyan flag financially attractive.

With current trends showing a preference for foreign flags, it is imperative to create a climate where Kenyan registration becomes a rational economic choice. Second, Kenya must adopt creative financing models to support the capital-intensive nature of the shipping industry.

Establishing a dedicated Cabotage Vessels Financing Fund, alongside public-private partnerships using pension funds, could help promote local ownership of shipping assets and mitigate the high costs of entry into the sector.

A cruise ship at Mombasa Port. PHOTO/FILE

Third, the country’s regulatory frameworks, such as the Merchant Shipping Act, must be updated to accommodate modern maritime needs. The laws governing cabotage—vessel operations within national waters—should protect domestic interests while also encouraging global participation.

A competitive ship registry requires far more than a simple administrative overhaul. It necessitates a comprehensive suite of fiscal incentives designed to attract both domestic and international shipowners.

For example, registration fee rebates for early adopters would encourage shipping companies to make the switch to the Kenyan flag. Additionally, administrative cost reductions and fuel rebates would help alleviate the operational burden on shipping companies, making Kenya a more attractive destination for global fleets.

A Tonnage Tax regime, akin to those in maritime powerhouses such as the UK, Greece, and Singapore, would provide fiscal certainty. This tax system, which taxes ships based on their net tonnage rather than profits, offers predictability and stability—qualities that appeal to shipping businesses looking for reliable fiscal environments.

Equally critical to the success of a Kenyan ship registry is the development of a skilled workforce. Establishing a Kenyan Merchant Navy Training Board (MNTB) would be a pivotal step in creating a comprehensive system for maritime education and training.

This board would ensure that maritime courses align with international standards, that cadetship programmes are created in partnership with shipping companies, and that seafarer certification complies with the International Convention on Standards of Training, Certification and Watchkeeping (STCW).

Furthermore, subsidies for cadetship training and seafarer tax exemptions could incentivise both companies and individuals to invest in developing local talent. This would not only strengthen Kenya’s maritime workforce but also make the Kenyan flag more attractive by ensuring the availability of trained, competent seafarers.

The implementation of an International Open Ship Registry in Kenya would initiate a virtuous cycle. Registration fees could fund essential infrastructure and training programmes, while a stronger regulatory framework would enhance safety, environmental compliance, and Kenya’s ability to influence international maritime policies.

In addition, with greater local ownership, Kenyan stakeholders could benefit from the long-term economic returns of a flourishing maritime sector.

In turn, Kenya would gain a more influential voice in global maritime forums, allowing the nation to shape policies that reflect its own national interests and regional aspirations.

Kenya stands at a pivotal moment in its maritime history. With the potential to capture lost tonnage fees and significantly boost its maritime profile, Kenya must act decisively to establish a competitive and sustainable maritime registry.

By implementing sound fiscal policies, updating legal frameworks, investing in human resources, and creating strategic incentives, the nation can position itself as Africa’s leading maritime hub.

The time to act is now. Kenya’s maritime future is full of untapped potential—by seizing the opportunity to establish an International Open Ship Registry, the country can transform its maritime sector into a key pillar of its economic and regional leadership.

The writer is a veteran merchant mariner