Uganda has backed out of a deal that requires all goods imported through Kenya with final destinations being neighbouring land-locked countries be transported on the standard gauge railway.
The directive to ferry goods directly from Mombasa to the Naivasha Inland Container Depot (ICD), supposed to take effect on June 1, was agreed at a virtual meeting attended by presidents of Kenya, Uganda, Rwanda and South Sudan.
It was intended to cut the time taken from Mombasa to the Uganda border in a bid to reduce transmission of Covid-19 by truck drivers along the transport corridor. But Uganda appears to have reconsidered its positions, saying use of SGR should be optional.
“The option of using Naivasha ICD for transit cargo would not reduce human movements as truck drivers will still be required to pick the containers from Naivasha to the destinations,” says Ugandan Minister of Works and Transport Katumba Wamala in a letter sent to his Kenyan counterpart James Macharia.
“It is our considered opinion that the use of Naivasha ICD, which is part of our long-term regional infrastructure development, should remain optional, added the letter.
Uganda accounts for more than a quarter of the Mombasa port business.
Separately, truck drivers have also resisted the Naivasha ICD order, citing massive investment and job losses and sought to meet Mr Macharia over the matter.
“The decision was reached by four Heads of State early this month and I have communicated to Mr Wamala regarding his request to make it ''optional" and we hope he is satisfied with the explanation since before they had no objection. To other stakeholders who feel robbed their business, we are engaging them in various platforms to explain to them on reasons behind that decision and the advantages of using the service,” said Mr Macharia in a response to The EastAfrican.
He added that the gazetted date of June 1, 2020 to implement the order still stands.
The truck drivers have complained that more than $5 billion worth of their investments in the Northern Corridor could go down the drain if the directive is implemented without adequate transition time.
Both Kenyan and Ugandan transporters have built warehouses and depots in various towns in Kenya to support their logistics businesses.
Uganda remains a key trade partner to Kenya. Its exports and imports through Mombasa have been on the rise currently standing at more than 10 million tonnes annually, or about a third of the total cargo throughput at the port.
The Kenya Transporters Association chief executive office, Dennis Ombok said the number of trucks plying the Northern Corridor will drop by more than half if the directive is implemented and lead to huge job losses.
“Hundreds of workers in clearing and forwarding and truck drivers will be directly affected, but we should also note other businesses such as fuelling stations, marshalling yards among others will also lose out among other players in the supply chain,” said Mr Ombok.
The transporters have scheduled a crisis meeting with Mr Macharia next week. The Kenyan Transport minister insists that importers will get a better deal from using the SGR to Naivasha.
He says the tariffs that the government has offered to importers to transport the cargo from Mombasa to Naivasha are lower than using road, besides minimising the risks posed to the drivers, trucks and cargo when using trucks.
“The reason of fast-tracking the process of collecting cargo at Naivasha is to protect drivers from contracting Covid-19, and to importers, they will get their consignment 10 hours after it is loaded in Mombasa compared with two days of using trucks, also cases of cargo loss will be a thing of the past,” said the CS.
The Kenyan government had raced to put in place requisite office accommodation to the Kenya Revenue Authority, Uganda Revenue Authority, Rwanda Revenue Authority and the South Sudan Revenue Authority at the Naivasha ICD to ensure smooth clearance of cargo after the four Heads of State approved the directive during the during their meeting on May 12.
"President Paul Kagame of Rwanda, President Uhuru Kenyatta (Kenya), President Yoweri Kaguta Museveni (Uganda) and President Salva Mayardit Kiir of South Sudan during last Consultative Meeting of the East African Community held by Video Conference considered appropriate cross-border transportation modalities to reduce human traffic movement without impacting negatively on transportation of cargo across the borders and the use of SGR is one of them," said Mr Macharia.
MAKING IT ATTRACTIVE
His Ugandan counterpart, said however, “If government of Kenya makes it more attractive, big industry players/shippers like Bollore, Mukwano Group of Companies and others can be encouraged to start using this facility because of economies of scale.”
Early this month, Kenya Railways Corporation launched direct SGR freight services for all transit cargo to be ferried directly from Mombasa port to Naivasha ICD where trucks will pick them for onward transportation. The new direct SGR cargo freight from Port of Mombasa to the Naivasha which will cost $600 for 20 feet container and $850 for 40 feet container of up to 20 tonnes and $910 for the same container weighing above 21 tonnes.
The freight train will reduce time taken to transport consignment to different East African countries considering it cut coverage of the distance from port of Mombasa to Uganda by 46 per cent.
To reduce number of fuel trucks, all fuel products will be transported by pipeline to Kisumu and thereafter by Lake Victoria to Port Bell or Jinja.