Is Naivasha ICD sufficient to enhance regional trade?

Kenya moves to reduce use of road for cargo transport

In Summary

•The Mombasa port providing access to hinterland regions and serves a combined market of over 300 Million people

•Kenyan government recently required all transit goods imported through the Port of Mombasa to be cleared and evacuated via the Naivasha ICD

The Port of Mombasa has historically played a significant role in the East and Central African region as the main port of entry or exit of goods into or out of the region.

Specifically, the Port of Mombasa is considered a vital route into the African market – providing access to hinterland regions within Kenya, Uganda, Rwanda, Burundi, South Sudan, Norther Tanzania, Eastern Democratic Republic of Congo, Ethiopia and Somalia and serving a combined market of over 300 Million people. Further, the Port of Mombasa has direct connectivity to an excess of 80 seaports worldwide and is accessed by over 30 international shipping lines, thereby making the port a vibrant import and export artery.

The critical significance of the Port of Mombasa to Kenya’s trade ambitions and regional geopolitical relevance can not be understated. Perhaps it is with this in mind that the current administration embarked on the LAPSSET and SGR infrastructure development plans. Through the LAPSSET Corridor Program, the Government of Kenya intends to introduce a second transport corridor that will support the existing Mombasa – Uganda corridor, thereby enhancing our total trade capacity. In addition, through the SGR, it was intended that the transit of goods within and without Kenyan borders will be seamless, efficient, and cost-effective. Under revised SGR development plans, the SGR terminates at the Naivasha Inland Container Depot (ICD).

In a view to mitigating risks associated with the further importation or spread of the current COVID-19 pandemic, and perhaps as an opportunity to expedite already existing plans, the Kenyan government recently required all transit goods imported through the Port of Mombasa to be cleared and evacuated via the Naivasha ICD. The move is expected to reduce clearance times through the decongestion of the Port of Mombasa, reduce transit costs due to shorter transport routes and further decongest road transport routes between Naivasha and Mombasa.

However, despite the potential benefits of the move, the same has been faced by wide criticisms by domestic and international imports alike. Critics highlight the availability of necessary infrastructure in the established Mombasa Port, together with the higher costs of SGR transportation as opposed to road transport. Further, it has been highlighted that inefficiencies in the clearance processes experienced in the Mombasa Port have simply been transferred to the Naivasha ICD, thereby negating the promised clearance efficiencies in the Mombasa Port.

The above notwithstanding, the creation of additional transit good clearance and evacuation facilities is indeed a welcome move, to the extent that the growing needs or the East and Central African regions outpace the capacity of the Port of Mombasa. It is expected that reduced congestion (perhaps the largest challenge faced by the Mombasa Port), will translate to increased efficiency and ultimately reduced costs, thereby given Kenya’s established transport corridor a competitive edge over other regional transport routes, such as through the Port of Dar Es Salaam.

Karen Kandie - MD IDB Capital