Kenya: Costs of imported goods set to increase

Topic: D - Goods - Technical Barriers to Trade
Author: Sambu, Zeddy; Business Daily (Nairobi)
Published: 11/03/2008

The introduction of new levies on containers which are stored in the private warehouse is set to increase the cost of imported goods significantly. Introduced by the Mombasa Municipal Council, the new levy will be charged at the rate of Sh1.700 per day per container transferred to the port city’s Container Freight Stations (CFSs).

This means that importers will transfer additional costs to end users as the cost to import any goods will increase. Eight container warehouses, including Awanad, Boss Freight Terminal, Consolbase, Kipevu, Mitchell Cotts, Siginon Freight, and Transami, are licensed to handle undocumented goods. The past three years, with heavy congestion at Kenya Ports Authority’s (KPA) container terminal, has seen these warehouses become important players in the transport and logistics sector thereby making them top candidates for revenue hunters. Most importers transfer their containers to the CFS stores upon expiry of KPA’s week long grace period. The transfer attracts an additional handling fee of US$100 for 20 foot containers and US$120 for every 40 foot container. KPA charges US$20 for every 20 foot container and US$30 for 40 foot containers upon expiration of the grace period.

Officials from the Ministry of Transport have said that the new levy is illegal and asked the council to stop charging it immediately. “It must stop forthwith as it has no legal basis”, said Transport Minister Chirau Ali Mwakwere to Ugandan importers in Kampala. Mwakwere assured port users in Uganda that normality will return in port operations and Kenyan road systems following nearly two months of blockade as a result of the outbreak of post-election violence in Kenya on New Year’s Eve.

To clear the backlog, he said that port authorities were allowing transit cargo to leave on “24 hours-seven days basis”. Speaking at a meeting on trade and transport in Kampala, Mwakwere told the Kenya-Uganda bilateral consultants that the entire North Corridor highway, which was worst affected by Kenya’s post-election violence, is now safe and secure. Uganda, as a dominant user of the Mombasa port, was significantly affected by the violent outbreak in neighbouring Kenya. Complete blockade of the North Corridor road saw imported goods’ prices skyrocket in landlocked Uganda and Rwanda. In the former country, petrol prices more than tripled by mid February as rowdy youths blockaded the highway completely which cut the country’s supply of oil products. According to KPA Managing Director Abdallah Mwaruwa, containers are being transferred to inland depots in Nairobi, Kismu and Eldoret for easy access to the owners.

John Byabagambi, acting Minster for Transport in Uganda, said that the signing of a peace deal by Kenya’s opposition parties has assured the region of a return to normalcy. He did, however, urge the players to address the challenge of non-tariff barriers to trade in the region; he urged authorities to strengthen the initiatives which have been made to boost economic cooperation and enhance trade and investment in the region. Revenue authorities from Kenya and Uganda have already established joint verification processes at the Malaba border to speed up the clearing of transit goods.