East African nations have embarked on aggressive infrastructure and real estate development to support their economies, which are expected to grow an average of about 7 percent this year, according to the International Monetary Fund.
Gichiri Ndua, managing director of Kenya Ports Authority, said the boom in the construction industry, thanks to growing demand for houses, vast infrastructure development and an emerging middle class, has driven up regional trade.
"We have witnessed increased importation of oil, clinker which makes cement, steel ... bitumen for road construction, and second hand cars and this shows the disposable income of the middle class," Ndua told Reuters in an interview.
Ndua said the construction of the terminal with a capacity of 18 million tonnes, is expected to begin in September at a cost of about 27 billion shillings ($290 million)
"The second container terminal is funded by the Japanese government and the amount ... is about 22 billion shillings from JICA (Japan International Cooperation Agency)," said Ndua
"The balance of about 5 billion shillings will be raised through treasury."
Expansion of the Mombasa port is crucial to serve landlocked countries including Uganda, Rwanda and Democratic Republic of Congo, in order to handle increased importation of commodities such as steel.
Plans to privatise the port are still shelved, even though analysts say this would bring much-needed efficiency and competitiveness by spurring trade in the region.
"The privatisation process was stopped by the government and that remains the position," said Ndua.
The first phase of the three-stage container terminal development is expected to be completed in 2015, Ndua said.
The extension of the port will also include an additional berth, projected to be completed next year, which will enable three vessels to unload simultaneously, beefing up turnaround of goods at the dock.
Ndua anticipates the port's throughput to increase by 500,000 tonnes this year from 18.93 million tones in 2010. Increased maize importation due to drought in the horn of Africa is also expected to amplify port activity.
Construction of Kenya's second port in Lamu, north of Mombasa, with a capacity of 23 million tonnes per year is expected to begin this year. ($1 = 93.225 Kenyan Shillings)
