REALITY CHECK

How to revive Coast economy as SGR eats into trucking business

The region has huge potential in tourism, agriculture, fishing and mining that can be used to generate alternative sources of income after the shift of cargo from trucks to rail led to job losses

In Summary

• The government target is to have 40 per cent of all goods handled by the port of Mombasa transported by rail

• This is hurting towns and rendering jobless those previously employed in trucking companies and the Container Freight Stations

Illustration of the SGR snaking its way through the country
Illustration of the SGR snaking its way through the country
Image: STAR ILLUSTRATED

Much has been said about the dwindling economic fortunes of towns along the Nairobi-Mombasa highway as a result of the shift in cargo transportation from trucks to the SGR. But is it possible to reverse the trend?

The city of Mombasa is the largest population centre in the eastern half of the country. Mombasa is the largest centre of economic activity at the coast and surrounding counties. Any change in the economy of Mombasa affects a much wider region. The downturn in the trucking business has been felt far and wide across the Coast region and on small towns along the Mombasa-Nairobi highway.

In 2018, the port of Mombasa handled 1,306,283 Twenty-foot Equivalent Units (TEUs), data from the Kenya Ports Authority shows. A TEU is the equivalent of a 20-foot container.

 

That same year, the SGR transported 256,550 TEUs between the port of Mombasa and the Nairobi Inland Container Depot (ICD). This implies the SGR handled approximately 24.8 per cent of export and import container cargo between Nairobi and Mombasa. The overall percentage looks modest but it had negative effects on the coastal economy.

The government target is to have 40 per cent of all goods handled by the port of Mombasa transported by rail. In 2019, SGR cargo operations were almost at full capacity in terms of the number of trains. Meanwhile, construction of the dry port at Mai Mahiu is ongoing and could be completed within 2020, resulting in a further reduction of trucks collecting goods from Mombasa.

Nevertheless, even if the portion of cargo transported by rail reaches the target 40 per cent, there would be 60 per cent of cargo still moving on trucks. The outlook for truck operators is, therefore, not completely gloomy.

With job losses seen so far in the shift of cargo from trucks to rail, the national and county governments should find innovative approaches to help those previously employed in trucking companies and the Container Freight Stations (CFS) find alternative sources of income. Apart from transport and logistics, the other major economic activities at the coast are tourism, agriculture, fishing and mining.

Taking tourism into the 21st century

Each year, hundreds of thousands of tourists visit beach resorts at the coast. There are many other tourist attractions, such as Shimba Hills in Kwale county, Tsavo National Park in Taita Taveta county and the several marine parks going all the way to Lamu. Data from the Kenya Tourism Board (KTB) shows that Kenya received 2 million visitors in 2018, one of the highest numbers of arrivals in the country’s history.

Despite the increased numbers, hotel operators are struggling to fill up beds. Employment in the tourism industry is not growing as fast as visitor numbers. This could be attributed to shifting trends in the market as visitors opt for online service providers for accommodation. According to the KTB, the number of guest arrivals using online platforms for accommodation grew by 68 per cent in 2018.

 
 
 

Just as previous technological developments forced the society to adapt, current changes in transport and tourism at the coast will require proactive steps by the private sector and the authorities to maximise on opportunities brought about by digital technologies. Kenya should learn from other countries that get as much as 30 million visitors a year without having national parks or clean tropical beaches.

Revitalising coastal agricultural production

Just as elsewhere in Kenya, most people in coastal rural areas depend on agriculture as a source of living. Farmers will produce food as long as they have ready buyers for the produce. Improved access to markets also means improving rural roads. Farmers and consumers should be able to buy and sell, regardless of the weather. Laws that restrict the movement of agricultural produce should be eased to encourage trade.

Cess taxes should be re-evaluated because they have no obvious benefit to farmers. Cess is supposed to help maintain roads but this has not quite been the case. Coconut farming has huge potential as a cash crop at the Coast; over 80 per cent of farming households at the coastal strip derive their livelihood either directly or indirectly from the coconut tree. Anything done to find new markets for coconut products will have an immediate positive impact on the economy.

Make it easier to do business

Running a business is hard enough without dodging county and national government agencies every day. All national and county government business requirements should be consolidated into a one-stop investment office that will make investors easily find out what is required of them.

This will increase compliance with government regulations, while eliminating opportunities for corrupt officials who show up at business premises demanding bribes. All government agencies should promote the growth of business instead of issuing arbitrary directives that close businesses.

Provide concessions to attract investors

County governments at the coast should, through Jumuiya ya Kaunti za Pwani (the coastal economic bloc), lobby the national government for tax cuts and concessions that would attract investors, stimulate economic activity and create jobs. There are lots of opportunities in tourism, agriculture, conservancies and mining that are ripe for investment, but the potential has not been fully exploited.

Streamline the mining industry

The six counties of the coastal region have viable deposits of gemstones, titanium, iron ore, manganese, sand, building blocks and other minerals. However, the mining sector must be reformed to speed up extraction, while benefiting local communities and maintaining environmental standards.

Communities have a right to a share of revenues from mineral resources, but it's all rather pointless when the minerals are still lying underground. In as much as possible, investors in mining should be encouraged to get into partnerships with local communities (not politicians) to ease the fears people have of losing their land.

Edited by T Jalio