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Economy

Ugandan traders turn to Dar port as Kenya elections close in

Shipping vessels at the Port of Dar es Salaam. FILE PHOTO | NMG
Shipping vessels at the Port of Dar es Salaam. FILE PHOTO | NMG 

With about six weeks left for Kenyans to go to the polls, the private sector in neighbouring states are now beginning to look at the Dar es Salaam port as an alternative route to import and export goods.

Kenya’s main port of Mombasa, which according latest reports, registered 11 per cent cargo growth in the first quarter of 2017, serves Uganda, Rwanda, Burundi, South Sudan and DR Congo.

Although much preferred by the business community, the abrasions of the post-election violence of 2007/8 are still fresh because of its adverse effect on regional economies.

Uganda’s private sector is not taking chances, saying they should permanently resume use of Dar es Salaam Port

Gideon Badagawa, the executive director of the Private Sector Foundation of Uganda, hopes the elections will be calm and peaceful -- that Kenyan leaders and voters must have learnt their lessons from the 2007 experience.

“We have seen both the [main contenders] Raila [Odinga] and Uhuru [Kenyatta] commit to peaceful elections and calling on their supporters to avoid violence. Of course better said than done!

"We, nevertheless, are hopeful that the environment for business shall not be much distorted,” he said.

Mr Badagawa added Uganda needs to have ‘a plan B’. “It might be a good idea to begin opening up and using the route through Dar es Salaam,” he said.

Kampala City Traders Association spokesperson Issa Sekitto said goods should go through the Central corridor during this period.

Leading export

Uganda’s leading export commodity, coffee, is transited through Mombasa Port and many exporters saw their stocks pile in 2007.

This time round, coffee exporters are not taking a wait-and-see attitude due to concerns about potential violence during the polls.

Mr Joseph Nkandu, the executive director of National Union of Coffee Agribusiness and Farm Enterprises, a farmers organisation involved in the production and export of coffee, said the 2007 election violence in Kenya was a big lesson to Kenyans and the land-locked countries who export and import goods through Kenya including Uganda.

“Definitely this becomes more than an individual company to handle but rather a country strategy. All of us as exporters and government of Uganda we must join hands for plan B Tanzania,” Mr Nkandu told the Daily Monitor on Sunday.

He admitted that although Dar es Salaam, over 1,700 kilometres, comes with added costs of more than 20 per cent, it is less than diversion costs in case violence erupts.

Using the Mombasa Port costs about $1,500 to $1,800 for a 20-foot container. This is less than Tanzania’s $2,500 and more including more time in delays.

Overdue compensation

Ten years down the road, traders are still waiting for compensation for the losses they incurred. The 2007/8 post-election violence saw Ugandans’ properties worth about $40 million (Shs144 billion) destroyed.

“In fact if we had capacity we would make a project of telling everybody about this injustice,” Mr Sekitto said.

Commenting on this, Mr Badagawa said unlike the Uchumi case, Kenyan authorities have tended to be adamant.

“We continue to push government of Uganda to push Kenyan authorities to make this good. They promised but have not effected. These issues have been advanced to the EAC,” Mr Badagawa said.

He advised the Ugandan business community to take insurance policies for compensation in case violence breaks out and affects their businesses.

Ten years ago, the Dar es Salaam port which commanded more than 30 per cent of Uganda’s share of cargo, lost this market because of several hurdles the route had, such as poor roads and insecurity.

However, the Tanzanian government, through its ports authority, has embarked on a strategy to expand the port and also eliminates all the barriers in order to regain their regional market share.

Port expansion
Tanzania signed a $154 million port expansion contract with a Chinese firm as part of plans to transform it into the region’s transport and trade hub.
In the 2017/18 budget proposal, Tanzania Finance minister Philip Mpango scrapped value-added tax on transit goods from its main ports.

The move is intended to win back importers from landlocked countries who saw this as an additional cost to their business.

Under the port upgrade contract, which is funded by a World Bank loan, Tanzania is planning to build a roll on/roll off (ro-ro) terminal and to deepen seven existing berths in order to accommodate larger container ships.
In an interview with Daily Monitor, Tanzania Ports Authority director general Deus Kakoko at the sidelines of the 8th Central Corridor Inter-State Ministers Meeting in Kampala this week, said:

“What was lacking was the transport systems and this is being addressed to reduce the delays.”

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