Columnists

Clarity needed on proposed dry ports

port

Cargo at the port of Mombasa. FILE PHOTO | NMG

Last week whilst hosting South Sudan President Salva Kiir, the President Uhuru Kenyatta announced that Kenya would allocate South Sudan ten-acres for the construction of a dry port at the Naivasha special economic zone to ease the movement of goods destined for South Sudan.

South Sudan is the second country to be given this deal. A similar undertaking was extended to Uganda in March where Kenya offered land at the Naivasha special economic zone to sweeten the joint Standard Gauge Railways between the two countries.

Now, the Naivasha dry port is part of the northern corridor master plan aimed at establishing inland freight hubs to end congestion at the Port of Mombasa. The concept of a dry port is simply to have an inland terminal away from the sea port where containers are handled in the same way as a sea port.

Basically, a dry port has an inland container terminal, bonded facilities, warehousing capacity, container yards and administrative offices for regulatory inspection, clearing and customs activities.

The idea of a dry port is actually not new in the East African region. Just last year, Rwanda government and Global port operator DP World opened the first inland dry port 20 kilometers from its capital Kigali. Some years back, Uganda was also setting up a dry port in Tororo, less than a kilometre from the Malaba border post, but the plan seems to have failed.

Unfortunately, the government seems to be making these moves through unilateral decrees without a due diligence or a guided framework when a lot is at stake.

First, the cost of having the dry ports in Naivasha will be coming at a price to be paid by the Mombasa economy which is built on the backbone of maritime transport and logistics apart from tourism.

The government has already forced local importers to use the Nairobi internal container depot and moving Uganda and South Sudan importers to Naivasha will be killing the maritime logistics economy (cargo handling, warehousing, clearing and forwarding, truck haulage) left in Mombasa.

Second, in the same presser with Mr Kiir, Mr Kenyatta talked about the Lamu port whose first berth will be ready this August while berths 2 and 3 are expected to be completed next year, encouraging South Sudan to be ready to use the port.

Now, the Lamu port under Lapsset (Lamu Port South Sudan Ethiopia Transport) runs through a different corridor from the Mombasa port corridor, which is the one that goes through Naivasha. So, the question is which corridor is Kenya prioritising for South Sudan?

Third, which is the crux of the matter, who exactly will be the strategic investor in these dry ports Kenya is encouraging Uganda and South Sudan to set up at Naivasha.

There is no detailed roadmap from government on what exactly they are looking at but the indication seems to be that Kenya is offering the two countries land so that they can set up their own cargo handling and logistics economy. Now, it’s understandable that Kenya is working hard towards strengthening and deepening economic partnerships with the two countries, especially making Mombasa maritime route more favourable for Uganda to ward off competition from Dar es Salaam port, which handles around 20 percent of Uganda’s container imports.

But this is a bad deal heavily skewed against Kenya, because if Kenya is only providing land while Uganda and South Sudan invest in operations of the dry ports it means Kenya will lose cargo handling business coming against the backdrop of killing maritime logistics business in Mombasa by moving to Naivasha.

Ideally, a dry port is set up to streamline clearance and tax compliance to avoid congestion and other clearing inefficiencies at the sea port.

Therefore, the best deal is for Kenya to keep the cargo handling business whilst Ugandans and South Sudanese come in on enforcement and compliance, clearing and customs activities moving them away from the border posts and now stationed in Naivasha.