Uganda has escalated Kenya’s standoff over compulsory use of the inland port of Naivasha for transit goods, saying the facility lacks basic amenities required for cross-border trade.
In a second letter to his Kenyan counterpart James Macharia, Ugandan Minister of Works and Transport Gen Edward Katumba indicated that the Naivasha Inland Container Depot is not capable of handling imports intended for transhipment to Kampala and other neighboring land-locked countries, including Rwanda, South Sudan and the Democratic Republic of Congo.
Uganda is the main transit user of the transshipment services at Mombasa port, serving as a transit corridor for the other neighbors in the hinterland.
“I refer to your letter dated May 28, 2020 and would like to re-affirm the Uganda government’s commitment to use the Naivasha ICD in the spirit of regional integration. On the other hand, I would like also to re-affirm that the findings of the technical team in their visit to the ICD need to be addressed to improve the facility making it more attractive to shippers,” says Gen Katumba in the letter sent to Nairobi on Thursday last week.
“Our considered opinion remains that the use of the Naivasha ICD should remain optional and the government of Uganda will continue to encourage the business community in Uganda to use the SGR because of its benefits.”
Uganda wants the Kenyan government to revoke a legal notice that made the cargo from Mombasa to the Naivasha ICD mandatory, claiming that the facility has no basic facilities to encourage cross-border trade.
In his second letter in as many weeks, Gen Katumba wants his Kenyan counterpart to rescind his notice and address issues raised by hauliers before the directive is implemented.
That puts both countries at loggerheads, with Kenya insisting that the directive be implemented as the grievances of the truckers are addressed.
Uganda says it supports the long-term strategic regional infrastructure project, admitting it will reduce turnaround time on imports.
At a meeting attended by the presidents of Kenya, Uganda , Rwanda and South Sudan, agreement was reached to start using the Naivasha ICD for all transit imports. It is intended in part to curb the spread by truck drivers of the coronavirus pandemic.
Ugandan traders have the option of moving their imports to Dar es Salaam from the Mombasa port, but the shift would see them covering considerably longer distances making it more expensive.
“We cannot move to Dar es Salaam port since its far with a number of border complications but what will do is to work out on the modalities with Kenyan transporters to ensure the Kenyan government considers our requests before implementing the directive,” said a Ugandan trader in Mombasa while requesting anonymity for fear of retribution.
Players in the logistics sector in Kenya have backed the stance of Uganda, claiming that infrastructure and the expense of using the service are way above those of using trucks that do not find job losses to the sector due to the directive.
Denis Ombok, executive director of the Kenya Transporters Association (KTA), said that a virtual meeting with Mr Macharia and members of the Transport Senate Committee, chaired by Kimani Wamatangi, had not reached an agreement.
“The meeting was tense, but Mr Macharia has remained steadfast on his decision that it’s a resolution of Head of States of four East African Countries. We have reached out to our transporters in Uganda who are the main Northern Corridor users and in solidarity we shall announce a date to suspend our services until the Kenyan government reconsiders its decision,” said Mr Ombok.
Mr Macharia has remained firm in the implementation of the directive as decided at the meeting of the EAC Heads of State on 12 May.
National chairman Roy Mwanthi of the Kenya International Freight and Warehousing Association (Kifwa) said Mr Macharia is resolving short-term cargo distribution issues but is shy to inform traders about the cost implications.
“Jobs have been lost and we are closing shops and this will result in high cost of importing goods which will lower Kenya’s revenue collection. The cost of using SGR direct freight and picking cargo in Naivasha to Kampala is way above that of using truck directly from Mombasa to Kampala,” said Mr Roy.
According to Kenya Railway Corporation’s tariffs, transporting cargo from Mombasa to Naivasha using the SGR costs $600 for a 20-feet container and $850 for a 40-feet container of up to 20 tonnes, and $910 for the same container weighing over 21 tonnes, and $1,500 for Kampala. This is exclusive of cargo handling fees totalling $300 compared to the $2,000 cost of using trucks directly from Mombasa to Kampala, including fees for returning empty containers.
