Mudavadi urged the immediate withdrawal of the new Merchant Shipping (Maritime Transport Operators) Regulations, 2024, asserting that they introduce requirements that would hurt the maritime sector and harm Kenya’s investment climate. He warned that the regulations could jeopardize the Kenya Ports Modernization Project, which is nearing the final stages of its Request for Qualifications (RFQ)
Prime Cabinet Secretary Musalia Mudavadi and Blue Economy and Maritime Affairs CS Hassan Joho are at odds over new regulations requiring foreign companies to enter joint ventures with Kenyan nationals, capping foreign ownership as minority stakes. The regulations mandate that foreign shipping agents and cargo consolidators must not exceed a 49% stake, stirring concerns that they contravene Kenya’s foreign investment policies.
In a strongly worded letter to Joho, Mudavadi emphasized that the regulation, known as the Ship Agent (Conditions Under a License), infringes on the core tenet of Kenya’s foreign investment policy, which calls for “fair and equitable treatment of investors.” He argued that forcing existing foreign shipping agents and cargo consolidators to reduce their current shareholding to minority levels disregards Article 40(2) of the Constitution, which protects property rights.
Mudavadi urged the immediate withdrawal of the new Merchant Shipping (Maritime Transport Operators) Regulations, 2024, asserting that they introduce requirements that would hurt the maritime sector and harm Kenya’s investment climate. He warned that the regulations could jeopardize the Kenya Ports Modernization Project, which is nearing the final stages of its Request for Qualifications (RFQ).
“Kenya is a free-market economy and a hub for international investment,” Mudavadi said, stressing that Kenya’s foreign investment policy rests on four core principles: fair treatment of investors, protection from arbitrary measures, encouragement of investments, and investor access to arbitration. In his letter dated November 6, 2024, he reminded Joho that the Foreign Investment Protection Act was established to foster and safeguard foreign investments in Kenya.
Mudavadi also criticized the 10% cap on foreign employees and managers within maritime operators, excluding shipping lines. “This implies that 90% of employees and managers must be Kenyan nationals,” he pointed out, stating that this measure infringes on constitutional rights of non-discrimination and association, outlined in Articles 27 and 36. According to Mudavadi, the Kenya Citizenship and Immigration Act provides adequate protections for Kenyan interests without imposing restrictive employment quotas.
He highlighted the economic impact, noting that each container moved via ocean vessels requires extensive landside logistics, which are largely handled by Kenyans. This setup, he argued, already provides significant local employment without restrictive regulations.
Finally, Mudavadi warned that if maritime operators fail to renew their licenses by 2025 due to non-compliance, the resulting disruption could devastate the import-export sector, harming supply chains and violating Kenya’s commitment to protecting foreign investments from arbitrary constraints. He concluded, “This provision undermines our investment policy’s aim of safeguarding foreign investments.”
