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Shipping & Logistics

How cargo will play key role in economic recovery after corona

The Port of Mombasa
The Port of Mombasa. FILE PHOTO | NMG 

Kenya is currently going through a bruising cycle. From the sporadic inflation movement in 2019, to the current Covid-19 pandemic that is yet to fully show its full impact on not only the local economy but also that of the continent and globe at large.

Already, unemployment is on the rise, and the economy is still taking a hard beating and we do not know for how long.

The government is working on stimulus checks to help jump-start the economy during our recovery journey. Indeed, the ability of stimulus programmes to boost the economy quickly by getting cash into mwananchi’s hand is welcomed. However, this has to be complemented with many other initiatives.

Job creation and optimisation of existing infrastructure will be key in the next phase of recovery as we seek to create jobs, raise real wages, and bolster the various sectors that have been hard hit including hospitality, aviation and manufacturing. To the greatest extent possible, these investments should be targeted to the workers, families, and communities and the lowest end of the economic pyramid.

As the supply chain around the world are disrupted, business leaders must prepare for the effects on production, transport and logistics, and customer demand.

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For a start, the country’s investment in the sea, air and rail networks provides an ideal platform to rebuild our economy and safeguard our position as the regional economic hub. The Port of Mombasa in conjunction with the now fully operational Standard Gauge Railway cargo transport network should lead in generating revenue for our country by ensuring that we efficiently deliver all the cargo to the hinterland - not just in Kenya but the region at large.

For the Kenya Ports Authority, this is the time to optimise the expanded yards and berths to handle more cargo, ride on the revamped ICT system and modernised cargo handling equipment to dominate the EAC market. The Inland container depots (ICD) should be a beehive of activity, employing and re-engaging the youth in clearing and processing the cargo for regional markets.

On the other hand, rail transporters like Africa Star Railway Operation Company should be at the forefront in offering significant cost efficiency for cargo haulage into the ports to enable the truckers and other last mile players to deliver the goods to the end users at an affordable cost. As a local feeder, an affordable road transport will definitely impact the cost of consumer goods.

Even at its lowest, once back in operation, our regional flier Kenya Airways, has the ability and capacity to airlift cargo shipments that will be vital today in the re-connectivity and regional economies.

To ensure these measures deliver all round economic value to the different economic segments, all the industry beneficiaries of the tax waivers and exemptions should be required to retain all their workforce – within the WHO self distancing standards, and ensure that they are optimising the youthful resources in linking up the regional market partners.

Even as we grapple on where to channel our resources in the recovery stage, we have to be cognisant that infrastructure optimisation has the effects of contributing to this ‘economic resuscitation’ and is expected to contribute to future economic growth.

To set priorities and better evaluate potential outcomes, the government could set a mechanism for calculating projects’ economic and social impacts, and a system for measuring and reporting performance. For now, a transparent pipeline of well-planned projects, with appropriate risk-adjusted returns, could help to attract public and private investment into the infrastructure ecosystem.

With the uncertainty and turbulence in the economy locally and across the world, the reality, of course, is that many players in the transport infrastructure sector will have some level of debt going into this. Some layoffs and drastic cost measures will be inevitable. However, operational improvement might just be the pivot point in ensuring that the costs of transport is fairly shared across the different players and not entirely passed onto the consumer of the transported goods.

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