Kenya yet to act on S. Sudan cargo demands

Kenya’s transport ministry is yet to implement a decision by the land locked country, reversing an earlier directive that all its cargo moved by the Standard Gauge Railway (SGR) be offloaded in Nairobi.

The cargo would then be moved by rail to the Naivasha Inland Container Terminal  and later to the Malaba Yard Facility for pick up for onward haulage by road.

The South Sudan government also suspended a deal with Nairobi Freight Terminal granting it exclusive rights to handle all its cargo passing through the Mombasa Port.

In a letter dated July 28 to Kenya’s Transport Cabinet Secretary James Macharia, South Sudan’s Transport Minister Madut Biar Yel sought to suspend his previous letter dated February 25, 2022 directing that South Sudan cargo be delivered through the Nairobi Freight Terminal.

According to the minister, the move had been intended to address “some important issues” at the Port of Mombasa, a move that had been pushed by Kenya to increase volumes on the SGR.

According to the South Sudan business the use of the Nairobi Freight Terminal had led to an higher rates, charges, delays in delivery of cargo and clearance pushing up commodity prices in the country.

Concerns of business community and general outcry’s by consumers of high prices in the markets were discussed in South Sudan Parliament on July 26, 2022 and resolved that the minister suspends his previous letter.

“It also concluded that the use of the different port and cargo handling facilities be optional for South Sudan importers,” Biar said.

Kenya is however yet to meet the request by South Sudan, imports and clearing agents yesterday said, exposing them to continued high costs of doing business.

This comes amid fears that the Port of Mombasa could lose business to regional ports of Djibouti and Eritrea.

According to the Chamber of Commerce in South Sudan, there are talks with Djibouti authorities to connect Djibouti, Ethiopia, and South Sudan to use Djibouti Port through Ethiopia.

The directive to move the transit cargo by SGR has increased costs, the Kenya International Freight and Warehousing Association ( KIFWA) yesterday said.

It costs $500 (Sh 60,025 ) to move a 20-ft container by SGR from Mombasa to Nairobi. 

From there, importers pay $3,500 (Sh 420,175) to have the same delivered in Juba by road bringing the total cost to $4,000 (Sh 480,200).

The same consignment costs $3,700 (Sh 444,185) from Mombasa by to South Sudan by road, which is cheaper.

“We are afraid that we might have to wait for a new government to come in place before any major decisions are made. Meanwhile, doing business remains expensive,” KIFWA national chairman Roy Mwanthi said.

Macharia in a letter seen by the Star, however, indicates the decision was met based on a request by the South Sudanese government.

He said the country’s cargo would move from the Nairobi Freight Terminal, after arriving by SGR, to the Naivasha Inland Container Terminal and then the Malaba Yard Facility at the border, for picking up by truckers.

“The move will reduce the distance between Juba and Mombasa,” Macharia notes.

The Kenyan government has been giving directives in favour of the SGR, including a previous directive that Uganda cargo be cleared at the Naivasha ICD, which was also protested.

While the ministry has been defending its move on the basis of decongesting the port, it is seen as a strategy to increase business for the struggling SGR, which recorded a drop in revenue in the first quarter of the year.

Overall revenues generates totalled Sh3.65billion, down from Sh3.66 billion same period last year, Kenya National Bureau of Statistics data shows.

Freight operations (cargo) accounted for the lion's share of Sh3.08 billion with passenger trains bringing in Sh569.27million.

Transporters, through its lobby-Kenya Transporters Association (KTA) has since called on the Competition Authority of Kenya to intervene and ensure a fair business environment.

According to CEO Mercy Ireri, SGR and road transport are interdependent and hence need to have a level playing field.

“What we are currently experiencing is not a level playing field and the actions were taken by the State to seemingly enrich a few, remove freedom of choice and restrict competition, is both immoral and in our opinion, illegal,” Ireri says in a letter to CAK.

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