Why reforms at Mombasa Port are more urgent now than before

Mombasa Port's second container terminal on March 22, 2017. PHOTO | JEFF ANGOTE | NATION MEDIA GROUP

What you need to know:

  • Mr Joho has continued to threaten Kenya Ports of Authority, claiming the port does not benefit the coastal people.
  • The politics being played by Mr Joho has persisted for decades, turning Mombasa Port into a playground for local barons, who exert considerable influence on its management and logistics chain.

When Mr Ali Hassan Joho was elected governor of Mombasa in 2013, one of his immediate plans was to take over the port and oversee its operations.

He considered it a perfect opportunity to control the massive business that goes on at the port and the billions that change hands in the import and export trade, Customs and other revenue stations.

He was reminded that under the Constitution, the port is a national and not a county asset.

Mr Joho has continued to threaten Kenya Ports of Authority, claiming the port does not benefit the coastal people.

In 2014, he attempted, but failed to impose a levy of two dollars on every tonne of cargo handled by the KPA, which would have given his county government a revenue stream of over $52 million a year—based on the 26 million tonnes of cargo the port handles in a year.

PLAN FAILED

The plan failed, even after Mr Joho threatened to mobilise locals to take over the port.

The politics being played by Mr Joho has persisted for decades, turning the port into a playground for local barons, who exert considerable influence on its management and logistics chain.

These deeply entrenched vested interests have stifled its potential as the gateway for trade between Kenya and the rest of the world.

The control by cartels contributes to waste and imposes constraints to the growth of the economy in terms of the heavy burden of the costs they transfer to manufacturing and other sectors that depend on the port for imported inputs and exports.

Even though port users developed a charter to promote free trade, little has changed since President Uhuru Kenyatta launched it in 2014.

EFFICIENT TRANSPORT

The Mombasa Port Community Charter states that constraints at the port and along the Northern Corridor drive transport costs to nearly 30 per cent of the cost of goods.

This compares unfavourably with only four per cent for the most efficient transport corridors.

It means users of the port and the Northern Corridor suffer a penalty of 26 per cent more than those using the most efficient transport corridors.

Such punitive costs make locally produced goods more expensive in global markets.

The charter identifies economic constraints, which can be resolved with better management and reforms.

But there are two problems that aren’t easy to deal with without political will.

UNETHICAL PRACTICES

These are, as stated in the charter, “corruption and unethical practices by different parties in the logistics supply chain”, which include “deliberate obstruction of free trade and profiteering by a number of the players, both public and private.”

The port also suffers from political interference through frequent management changes.

It is in need of transformation, but powerful barons mobilise the 7,000-member strong Dock Workers Union to oppose reforms, claiming that jobs would be lost.

An attempt to transform Mombasa into a landlord port was scuttled by the cartels.

A landlord port such as Antwerp in the Netherlands, is a management model where the port authority owns and manages the port area, while activities are carried out by firms under concession agreements with the landlord.

HAMPERING GROWTH

The port remains highly inefficient, hampering growth of the manufacturing sector, regional trade and economic development.

The port can only achieve its targets and claim its place at the centre of trade and development in Kenya and the EAC, if the government disbands the cartels and their entrenched protection systems.

That also implies preventing politicians from interfering with operations and influencing appointments of senior KPA management.

The port needs infrastructure to achieve its projected growth, from 26.7 million tonnes of cargo in 2015 to 44 million tonnes by 2025.

Additional container terminals are needed to expand the handling capacity from just over a million in 2015 to 2.5 million 20-foot containers in 2025.

Port efficiency will also depend on cargo clearing infrastructure and external transport, including railways and inland container depots. Dry docks are also needed to scale up the combined cargo handling capacity of the port and inland facilities.

Mr Warutere is a director of Mashariki Communications Ltd. [email protected]