The Kenya Ports Authority (KPA) has moved to implement a Presidential directive reverting various port operations to Mombasa. In a notice to shipping lines and agents, KPA noted on Monday, September 26th that importers would henceforth be able to clear goods at facilities of their choice including the port, licensed Container Freight Stations (CFSs) and Inland Container Depots (ICDs).
After launching operations at the Inland Container Depot (ICD) in Naivasha in 2019, former President Uhuru Kenyatta issued an order for onward cargo at the Port of Mombasa to be transported to the ICD via SGR. His administration forced importers to use the standard gauge railway (SGR) in a bid to repay the $3.7 billion Chinese debt taken to build the railway.
“This is to notify all Shipping Lines that importers’ documentation of place of clearance and mode of transport for their goods shall no longer be in place. Shipping lines are hereby advised to facilitate importers’ nomination of place of clearance including port clearance, Kenya Revenue Authority’s Licensed Container Freight Stations (CFSs) and Kenya Ports Authority’s Inland Container Depots (ICDs),” acting KPA Managing Director Amb. John Mwangemi noted.
The directive transferring the clearance operations to Naivasha hit the Mombasa economy hard, resulting in job losses as many businesses including Container Freight Stations (CFSs) closing down.
University of Nairobi (UoN) researchers estimated that Mombasa’s economy would shrink by 16.1 per cent with 8,111 jobs lost if all cargo was transported by the Standard Gauge Railway (SGR) from the port.
President William Ruto announced the return of various operations to Mombasa in his first address as President, making good on on one of his key campaign promises.
“This afternoon, I will be issuing instructions for clearance of all goods and other attendant operational issues to revert to the port of Mombasa. This restores thousands of jobs in the city of Mombasa,” he stated on Tuesday, September 13 at his inauguration.
The move, however, also raises concerns on the future of the SGR which has largely been propped up by cargo operations. Exim Bank of China funded 90 per cent of the $3.6 billion line from Nairobi to Mombasa.
Kenya National Bureau of Statistics (KNBS) data indicates that in the first six months of 2022, SGR posted a total of $750 million in revenues with $610 million attributed to cargo.
The National Treasury projects that debt repayments to Exim Bank of China will rise to $800 million in the next financial year, up 126.61 per cent from the $351.7 million budgeted for the current financial year.