The recent tour of the Port of Mombasa by Ugandan President Yoweri Museveni and the Standard Gauge Railway (SGR) ride  from to Nairobi has given the new rail line the much needed endorsement as the best bet for moving cargo and people between Kenya and Uganda.

The visit has also renewed growth prospects for the port which faces threats from Tanzania’s Dar es Salaam and Tanga ports, especially after the southern neighbour announced plans to expand the two facilities.

Dar es Salaam port which has been eating on Kenya’s transit cargo to Uganda, Burundi and Rwanda has been undergoing transformation which has seen its competitiveness rise.

Construction of Bagamoyo port and its affiliate special economic zone, which are expected to begin operation by 2022 is also posing a major threat to Kenya.

However, to sustain its competitive advantage, Kenya has linked SGR to the Port of Mombasa and completed the construction of the first phase of the second container terminal which has been operational since April 2016.

The second container terminal is a key component of Mombasa port development programme and is being implemented in three phases on a total area of 100 hectares and capacity to handle 1.5 million twenty-foot equivalent units (TEUs) per annum on completion – bringing the overall port capacity to over 2.6 million TEUs by 2025.

A recent report by PricewaterhouseCoopers (PwC) on competition between the regional ports warned that ports will cannibalise business due to their proximity to each other.

However, Kenya Ports Authority has in a five-year self performance review of its 2012-2017 Strategic Plan, rubbished the report, saying the “proximity of other ports in the region is a boost to regional trade and not a threat to the growth of port business”. 

Regional ports

Kenya believes that despite  cut-throat competition from other regional ports, with SGR, expansion of the container terminal and improved efficiency,  Mombasa port still stands strong among its peers.

Experts say that with almost 80 per cent of Ugandan cargo passing through the port, the country still leads in transit cargo traffic and a railway transport linkage will significantly boost trade.

“Uganda is still interested in connecting Kampala to the Port of Mombasa for trade convenience and that is why even President Museveni himself decided to use SGR,” said Simon Sang, Dock Workers Union Secretary General.

Kenya on its part, he added, is also doing all it can not to lose Uganda as a key transit cargo user of the Mombasa port.

Uganda imported some 7.1 million tonnes of goods through Port of Mombasa in 2017 up from 6.3 million tonnes in 2016.

Tanzania has been trying to woo Uganda to abandon Mombasa port as its preferred transit cargo destination in favour of Dar es Salaam and Tanga ports.

“After losing the pipeline deal to Tanzania, I think Kenya is positioning itself to maintain its long time client and that is why it has also given incentives to please them,” Sang added.

In recent bilateral agreements between the two countries, Kenya offered several lucrative deals aimed at enticing Uganda to build its SGR line to Kampala. 

President Uhuru Kenyatta, for instance, offered Uganda land to develop a dry port for its cargo in Naivasha where the government  plans to build an industrial park.

He also promised to continue with reforms to improve efficiency at the Port of Mombasa and effectively deal with non-tariff barriers such as corruption and red tape in cargo clearance.

Museveni appeared earlier to have developed a cold feet on SGR with Ugandan officials blaming Kenya for failing to commit to financing the remaining two SGR phases, that is, Naivasha to Kisumu and Kisumu to Malaba sections of the line.

Kenya secured a Sh150 billion loan from China to extend the railway line from Nairobi to Naivasha after last year’s completion of the Mombasa — Nairobi section. 

Initially, due to the high cost involved in the construction of the modern railway line, Kenya had planned to take the line to Kisumu Port so that Uganda and Rwanda can evacuate their cargo via Lake Victoria.

“I think the area of interest for Uganda in Kenya is a dry port and a railway connection to transport cargo,” Sang said.

The latest development means Kenya will offer Kampala autonomy to take charge of its own goods and any transshipment to Democratic Republic of Congo (DRC) and Rwanda, that passes through  Uganda territory.

Trade relationship

Uganda Traders Association representative in Kenya William Kidima said trade relationship between the two neighbours have greatly improved over the last seven years after removal of many of the non-tariff barriers that had been hindering trade.

He said that Mombasa port still remains the preferred transit point for many of Ugandan traders because of the short distance compared to the Port of Dar es Salam.

Source: Media Max

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.