The Kenyan county of Mombasa’s plan to levy additional charges on users of East Africa’s biggest port threatens the viability of the regional transport and logistics business, the Shippers Council of Eastern Africa said.

Cargo shipped via the port of Mombasa will attract an additional levy of $2 per metric ton, or $10 per consignment, under new measures proposed in a bill introduced by the Mombasa County Assembly last week. New fees for export and import permits, vessel fumigation and ship inspections are also planned, according to the draft legislation.

“Transport and logistics accounts for 43 percent of the cost of doing business in East Africa,” Gilbert Langat, chief executive officer of the council, said in a phone interview yesterday from Mombasa. “We have been working to reduce it to 23 percent, but this increase in regulatory fees will drive it to over 50 percent, making business unsustainable.”

Mombasa is East Africa’s biggest port, serving landlocked countries including Uganda, the continent’s largest coffee exporter, Rwanda, South Sudan and the Democratic Republic of Congo. The facility is facing competition from neighboring Tanzania, where the government is investing to upgrade the main Dar es Salaam port and build a new one north of the commercial hub in Bagamoyo.

The proposed levies “will discourage investment in Kenya,” Langat said. “Some shippers are being forced to consider cheaper jurisdictions.”

Devolved Power

Kenya enacted a new constitution in 2010 that created 47 regional governments with the aim of decentralizing decision-making and accelerating local development projects. Mombasa wants more revenue from the port to improve service deliver and Mombasa Governor Ali Hassan Joho in May said the port should be managed by the Mombasa county government.

Kenya Ports Authority Chairman Danson Mungatana didn’t answer calls to his phone seeking comment, while the authority’s spokesman, Bernard Osero, declined to comment. Mungatana said last week that the port pays taxes to local authorities and is the biggest employer in the coastal region.

“Anyone who claims the port is not contributing to the locals is ignoring the facts,” he told a conference of the Kenya Chamber of Commerce and Industry in Mombasa. “We agreed with county governments to form a committee that will establish areas of cooperation to ensure equitability. We shall continue to work along those lines.”

Kenya is East Africa’s biggest economy and the world’s largest exporter of black tea.

Source: Bloomberg

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.