The South Sudan government has asked President William Ruto to end the monopoly of a firm associated with the family of former Mombasa governor Ali Hassan Joho for handling cargo destined for the neighbouring country from the Mombasa port through the rail line.
In a U-turn, South Sudan’s President Salva Kiir now wants Dr Ruto to allow goods to and from his country to be cleared at the port of Mombasa and not at the Nairobi Freight Terminal (NFT).
Juba wants more firms, including Compact, Consolbase, MCT and MitchellCotts, to be allowed to handle its goods in Kenya as it seeks to cut the monopoly.
Autoports Freight Terminals Limited, which is associated with the Joho family, has been handling nearly all South Sudan imports at the NFT.
“The purpose of this letter is to kindly draw your Excellency’s attention to our discussions on why we in South Sudan have opted to use the port of Mombasa rather than the Nairobi Freight Terminal for all cargo from and to South Sudan,” said Kiir in a diplomatic note to Ruto seen by the Business Daily.
“It is, therefore, my conviction that your Excellency’s good offices will impress our decision upon the Kenya Ports Authority, Nairobi Freight Terminal and indeed any other concerned institutions that are tasked with the movement of goods from and to the Republic of South Sudan,” added Kiir in a note sent to State House through the foreign affairs ministry.
Juba reckons that the shift will ensure a smooth flow of goods and stabilise the cost of consumer products in South Sudan.
The port of Mombasa, the biggest in East Africa and the region’s trade gateway, handles imports of fuel and consumer goods as well as exports of tea and coffee for landlocked neighbours such as Uganda and South Sudan.
“Clearing and forwarding transit cargo for South Sudan should be allowed to operate so that no firm has a monopoly over the process,” said Mr Kiir in the note known in diplomatic lingo as a “note verbale”.
Autoport has enjoyed near monopoly over the business and was at one time a target of the government over alleged tax evasion.
The man behind the firm is the former governor’s elder brother, Abu Joho, and the South Sudan deal was thrust into the spotlight after the Supreme Court upheld Ruto’s victory in the August 9 presidential election against his challenger Raila Odinga.
Autoport won the South Sudan contract on the strength of its deal with Kenya Railways that offered it a terminal at the Nairobi Inland Container Depot, which is connected to the Standard Gauge Railway (SGR) and allowed the easy evacuation of cargo from the Mombasa port.
Joho supported veteran opposition politician Odinga in the August 9 election, and the outcome of the presidential election contest fuelled fears that the new administration would be bent on reviewing the rail terminal deal.
The Embassy of South Sudan on Monday confirmed the “note verbale” but declined to comment on the response from the State House.
Foreign Affairs Principal Secretary Korir Sing’oei did not respond to our requests for a comment.
On September 13, after being sworn in as the fifth president of Kenya, Ruto issued an executive order directing that all clearance of cargo and attendant operations revert to the Port of Mombasa.
This was in accordance with the promise he made to the coastal people during the elections campaign period.
But Ruto softened his stance, offering freedom to South Sudan to decide where they wanted to clear their goods from, including the two dry ports—Nairobi and Naivasha.
South Sudan threatens
South Sudan had threatened to transfer business to the Djibouti route, in what would have denied Kenya revenue on 1.11 million tonnes of cargo that the port of Mombasa handles annually.
Mombasa has been the main route for all consignments destined for the landlocked country and South Sudan, but Juba has spoken about using the Port of Djibouti as an alternative.
The previous government had moved cargo clearance to the ICD in Naivasha and Nairobi as a way of boosting revenue to repay the $5.1 billion Chinese loan used in putting up the SGR between Nairobi and Naivasha.
In 2021, Autoport took over operations of a taxpayer-funded inland cargo terminal in Nairobi.
It received a right to use the NFT, strategically located near the SGR terminal in Syokimau.
Autoport convinced the KRC board of guaranteed business volumes, promising to move 1.6 million tonnes annually.
This deal prompted Juba early last year to offer Autoport the contract to handle all South Sudan imports at the NFT.
Different companies had been handling South Sudan cargo, but there were complaints of inefficiency.
That made the government in South Sudan change agents and tapped NFT as its only cargo handler.
The deal meant that cargo that passes through the port of Mombasa destined for South Sudan will be cleared in Nairobi, thus increasing volumes to be ferried on the SGR.
South Sudan is second after Uganda in the use of Mombasa port, accounting for 12 percent of imports to neighbouring countries.
Uganda accounts for the lion’s share of 71.7 percent or 6.64 million tonnes of the 9.25 million tonnes of imports.
Ruto said last year that Kenya will provide land to South Sudan in Mombasa to build a dry port to ease the cost of doing business between citizens of the two nations.
In September, South Sudan said it acquired three acres of land in Djibouti for the construction of a dry port as it sought to cut reliance on the port of Mombasa.