Outrage as Mombasa port scraps cargo clearance on credit terms

Saturday June 10 2023

Cargo trucks queue at the main entrance of the Kenya Ports Authority in Mombasa, Kenya. Shippers are concerned the new terms by KPA will demurrage charges. PHOTO | KEVIN ODIT | NMG


Traders using the port of Mombasa will be required to pay for their goods instantly through banker’s cheques after the Kenya Ports Authority (KPA) suspended payments through ledger accounts, effective July 1.

The move means importers will be forced to pay more demurrage charges, especially during weekends, when they cannot access banker’s cheques.

Traditionally, importers had privileges such as having ledger-guaranteed accounts with KPA that allowed for payment of goods within six days of clearance.

KPA Managing Director Capt William Ruto says the authority will cease to open and operate ledger guarantee accounts or credit accounts as KPA begins probing an alleged syndicate that manipulates such accounts.

In a statement to customers, KPA said it will start rendering services only through bank cheques and other bank payment systems, including real-time gross settlement (RTGS), adding that all customers with guaranteed ledger accounts will automatically convert to cheque deposits beginning July 1.

“Customers with ledger guaranteed accounts should ensure settlement of all pending or outstanding invoices before June 30. The authority will recall all guarantees with banks after June 30,” said Ruto.


“The management has also noted with concern customers operating in the port with huge outstanding debts. This has put strain on the authority’s ability to meet financial obligations hence we have given customers one-month grace period to clear all outstanding debts, failure to which the concerned customers will be denied port services and access to port facilities until the debt is cleared.”

According to sources within KPA, some customers' accounts have unpaid debts and were operating way above bank guarantee’s limit while some had their invoices aged over 30 days, which is against the authority’s credit policy that stipulates that invoices should settle within six days.

Already port users have protested the move which might force them either reduce the quantity of goods imported or seek alternative port to use in the region.

Shippers Council of East Africa (SCEA) Chairman Agayo Ogambi faulted KPA’s move saying it will increase cost of doing business at the Port of Mombasa.

“This is despite the fact that bank guarantees are as good as cash as long as the facility is not misused. We are engaging KPA MD on the matter and are hopeful for some good resolutions. If KPA insists clients pay cash, then it will probably be paid per invoice and by bankers' cheque or RTGS.

This will mean delays in processing and probably port storage charges will accrue. Further there are fears for increased costs for securing bankers' cheques,” Ogambi said.

Extra costs

The shippers said they are concerned of impending delays and storage charges that will be incurred as a result of the said changes.

“Transit countries may opt for Dar port if the notice is not rescinded. We urge KPA to deal firmly with firms that have misused the ledger facility and not to unilaterally punish compliant clients,” Ogambi added.

The Port of Mombasa last month registered a highest throughput in a month ever as different logistics stakeholders call for reduction of Non-Tariff Barriers along Northern Corridor to improve efficiency,” read part of the report by KPA; an increase of 48,570 TEUs or 8.2 percent.

This performance has surpassed the set target by 23,170 TEUs or 3.7 percent, implying that the Port of Mombasa is likely to realise an annual container traffic of 1.48 million TEUs by the close of the year.