Kenya on right track with sweeping changes at Mombasa port

Saturday September 14 2013

By Christabel Ligami

Government agencies at the port of Mombasa have over the past three months been implementing a presidential directive to have all cargo clearance agencies report to the Kenya Ports Authority to boost efficiency.

The EastAfrican’s Christabel Ligami spoke to the Meshack Kipturgo managing director of Siginon Group, a cargo logistics services company, on how their business has been affected.

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In June, President Uhuru Kenyatta called for reduced red tape at the port of Mombasa, to serve the region more effectively. What changes have resulted and how have they affected your operations?

The new container freight stations (CFS) regulations are a reflection of the level of importance that the government has placed on the sector. The changes include empowering the Kenya Ports Authority to make the final decisions on operational matters affecting the port, over other government agencies such as the Kenya Revenue Authority, Kenya Bureau of Standards, and Kenya Maritime Authority.

In addition, the KRA Customs Commissioner has relocated from Nairobi to the Mombasa Port, bringing the office closer to the operations. The period of operation has been increased to six and a half days from five and a half.  This has led to CFS operators aligning the staff operations to the new changes. 

The Lamu Port South Sudan Ethiopia Transport (Lapsset) highway, railway and pipeline project has generated a lot of excitement. What opportunities do you foresee for the industry and the region on its completion?

The port of Mombasa is operating beyond its capacity. This has caused major inconveniences to the business community. Lapsset is a timely solution and will help the country further cement its position as the region’s key entry point.

The project provides great opportunities for business expansion for the existing as well as new CFSs due to the anticipated increase in the total dry cargo throughput at the Lamu port. Predictably, there will be increased demand for warehousing and storage.

In addition, this project will ease transfer of cargo between Kenya, South Sudan and Ethiopia, thus providing new market opportunities within these markets as well as neighbouring regions in Central Africa. The transshipment business will also be greatly boosted.

The project will provide opportunities for joint infrastructure projects within the region. This will nurture business opportunities and create a logistics route. Ultimately, this will foster growth in the various economies and position the EAC as a strong bloc.

What measures can be taken by the Kenyan government to increase the competitiveness of the port of Mombasa?

The Kenyan government has already taken action as seen in the various stakeholder engagement initiatives that have resulted in the decentralisation of key Customs services to Mombasa, reduction of weighbridges as well as reviewing axle-load requirements.

On infrastructure, the government needs to focus on enhancing the efficiency of Kenya’s cargo logistics. This can be achieved through making the Northern Corridor — the highway from Mombasa to Malaba — a dual carriageway, to avoid unnecessary delays along the way caused by traffic jams and police roadblocks.

The government should also increase the capacity of the port to handle containers, which currently stands at under a million containers per year. The security at the port and throughout the Northern Corridor also needs to be enhanced.

The government needs to benchmark Mombasa port’s performance with other world class ports such as Shanghai, Singapore, and Hong Kong to meet and exceed their standards.

There is also the proposed $11 billion Bagamoyo port in Tanzania to be financed by the Chinese government. How will the proposed port increase trade?

On its completion, the Bagamoyo port aims to be among the top ports in the world. It will have the capacity to handle 20 million containers, far more than Mombasa and Dar es Salaam ports combined.

This could result in a major shift in the flow of regional trade towards Tanzania. However, this will only be felt once the Bagamoyo port is launched and becomes fully operational.

Kenya recently introduced a 1.5 per cent Railway Development Levy on all imports coming through Mombasa port. What steps will the industry players take to ensure they remain competitive?

The Railway Development Levy on all imported goods has been introduced as a means to finance the construction of a standard gauge railway to boost logistics efficiency in Kenya. The introduction of a 24/7 operation will go a long way towards facilitating faster turnaround and reduction on storage and demurrage.

Mombasa port will continue to be competitive as the consumer will see the value of efficient, timely logistics and the initial pinch of the price hike will be eased by profitable business returns.

Before the Kenyan General Election in March, importers took a cautious stance, which reduced trade in the country. What are the business prospects going forward?

During the election period, many importers adopted a wait and see approach towards the business environment in Kenya.  However, following the peaceful election, including a peaceful resolution of the election petition, we have seen steady business growth as a result of greater investor confidence in the Kenyan business environment. We are positive that, by the end of the year, the business coming into Kenya will be meeting and exceeding our expectations.

What opportunities do you see in the logistics business with the introduction of county governments in Kenya?

The government has allocated Ksh210 billion ($2.5 billion) to county governments and the bulk of that will go into infrastructure. This poses great opportunities for the logistics industry in provision of services such as clearing, forwarding and warehousing.

We have also seen various county leaders seeking investors to partner in projects to support infrastructural development within their counties. This will no doubt attract more foreign direct investment to meet the current and emerging needs of the counties.

If the county governments succeed, Kenya will be a study in the success of devolved government.

Kenya plans to build a free port. What opportunities do you think this will present to the region?

This could be a game-changer and accelerate our journey towards becoming a middle-class economy by 2030. For one, we can use it to build industries such as transshipping, where shipping lines can use it as a hub to feed smaller ports on the continent. We can also leverage on it to build a strong manufacturing sector as well our tourism industry.