Cost of imports to go up as KPA hikes port service tariffs

By John Oyuke

Prices of imported commodities are anticipated to go up as early as next month due to an expected increase in the cost of a number of services including freight and terminal handling at the East African Community’s main sea port of Mombasa.

Kenya Ports Authority (KPA) has announced an increment in its tariffs effective December 1 in a move expected to push up cost of imports and ensure cost of doing business in the region remains at its highest.

The tariff adjustment follows what the state corporation, a major facilitator of sea-borne trade in East and Central Africa referred to as successful stakeholder consultations in Mombasa, Kampala, Kigali and Bujumbura in September.

Managing Director, Gichiri Ndua, said stakeholders views had been incorporated and enough time given to the shippers. “Stakeholders views have been incorporated and enough time given to the shippers,” he said in a public notice. “To ensure stakeholder views have been incorporated and give enough lead time to shippers, the effective date of implementation has been moved from November 1 to December 1, 2012,” added Ndua.

The new charges for services offered including marine services and ship dues, stevedoring services – conventional cargo and for shore-handling, wharfage and storage services are already available on the KPA website.

Cash bonds

Freight forwarders already warn that the increase in tariffs, which comes as additional cost of doing business, is expected to lead to rise in the cost of commodities that go through East Africa main seaport of Mombasa. Federation of East African Freight Forwarders Associations (Feaffa) noted that Ugandan traders have already threatened to use alternative routes due to other challenges such as the recent introduction of cash bonds on transit cargo destined to Uganda.

“This is already hurting the business community using the northern corridor,” an official at the apex private sector body representing freight forwarding industry in East Africa, who spoke on condition of anonymity.

The northern corridor, which links the Port of Mombasa to landlocked Uganda, Rwanda and Burundi, with links to Northern Tanzania, the DR Congo, South Sudan, Ethiopia and Somalia accounts for annual cargo volumes in excess 10 million tonnes and transit and trans-shipment traffic of more than 2 million tonnes.

Speaking during the recent launch of Logistic Performance Index for East Africa, Kenya Shippers Council (KSC) Chief Executive, Gilbert Langat decried high transport costs in East Africa, saying that it poses serious challenges in the region’s ability to effectively compete with the rest of the world in trade.

He said the cost of transporting export goods is 60 to 70 per cent higher than US and Europe and 30 per cent higher than Southern Sudan.

“This state of affairs is expected to reduce economic growth by 1 per cent annually, especially in the landlocked Burundi, Rwanda and Uganda, whose development depends on transit solutions in neighbouring Kenya and Tanzania,” he said in Nairobi.

He noted that the ports of Dar es Salaam and Mombasa have cumulatively experienced an annual average growth in cargo throughput of 8.8 per cent occasioned by growth in regional trade in the recent past.

Although East African countries have introduced a series of reforms in simply doing business, traders continue to complain of difficulties due to a number of obstacles among them incoherent tax regimes and trade terms. This has seen traders spend a lot of time visiting different government agencies in various locations to obtain permits, trade licenses and clearance certificates to complete importation and exportation processes.

For instance two months ago, President Yoweri Museveni had to intervene in a dispute between the Kenya Revenue Authority (KRA) and Ugandan traders protesting an order to pay cash bonds for their goods.

A personal assistant to President Museveni petitioned Trade minister Moses Wetangula for a review of the cash bond. Traders had said it would be expensive for them to clear goods at Mombasa port using the bonds.

“We cannot afford to have any trade problems with Uganda. Even the personal assistant of President Museveni has called the minister for Trade asking for a solution,” Finance minister Njeru Githae disclosed.

He said he had called a meeting with KRA to resolve the dispute, which could jeopardise trade with Uganda, the single largest importer of Kenya’s goods. KRA has since cancelled the controversial new regulation.

The country took 31 per cent — Sh76 billion of Kenya’s exports last year. The value grew by 46 per cent from the previous year.

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