President Uhuru Kenyatta’s decision to allow landlocked countries build dry ports in Naivasha has triggered debate on how Kenya will benefit from the deal.
While shippers say the decision would help secure Kenya’s transit business, analysts insist the agreement should be carefully crafted.
On July 1, President Kenyatta promised visiting South Sudan counterpart Salva Kiir 10 acres for the construction of a dry port, three months after he made a similar offer to Uganda’s Yoweri Museveni.
A dry port is a customs area connected directly to a seaport by rail and road.
The Ugandan and South Sudan dry ports will rely mainly on the standard gauge railway for connectivity.
The contractual arrangement is scanty but sources at Kenya Revenue Authority said customs staff would continue working within the dry ports alongside Kenya’s clearing agencies.
“If Kenya is only providing land while Uganda and South Sudan invest in the operations of the dry ports, then this is a deal heavily skewed against the country. It means Kenya Ports Authority will lose cargo handling business, coming against the backdrop of killing maritime logistics business,” Mr Tony Watima, an economist, said.
“The best deal is for Kenya to keep the cargo handling business while Ugandans and South Sudanese come in on enforcement and compliance, clearing and customs activities.”
Kenya, which has seen the share of its Rwanda and Burundi-bound cargo drop over the years to negligible levels after the two countries opted for Dar es Salaam, is under pressure to safeguard its transit business.
Uganda and South Sudan account for 95 per cent of Mombasa port’s transit business, with the Democratic Republic of Congo also emerging as an important destination for cargo shipped via the northern corridor.
“Offering land to the two countries, which have been complaining of high logistics cost, is a sure way of getting them to commit resources on the Kenyan transit route,” Shippers Council of Eastern Africa chief executive Gilbert Langat said.
“A dry port will eliminate the high cost linked to delays at the Mombasa port and create a sense of ownership among the landlocked states.”
On the logistics side, having a dry port in Naivasha means Kenya will cut some 1,200 kilometres of trucking distance (the distance to and from Mombasa) on Kampala and Juba-bound cargo.
The country allocated a dry port will deploy its resources and equipment while facilitating trade to its expectation.
“With such massive investments, you expect the two countries to involuntarily start encouraging their citizens to move their import and export cargo through Kenya,” Mr Langat said.