Kenya and Tanzania in tight race for inland trade

Models pose with the EAC member states flags from left Burundi, Kenya, Tanzania, Rwanda and Uganda during a dinner by the East African Community ministry at KICC on June 30 2010.   Photo/PHOEBE OKALL

In Summary

• On Thursday, a visibly angry President Uhuru Kenyatta told off those talking of a split in East Africa Community arising from infrastructural projects.
• Rwanda, Uganda and Kenya have broken from Tanzania and Burundi to form “the collation of the willing” joining hands to launch several multi-billion projects and fast-tracking protocols that are meant to speed up regional trade.
• The battle for economic superiority has now narrowed to the ports, railway, roads and airport as both countries contend for most efficient transport hub serving landlocked countries in the

By Ramenya Gibendi
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On Thursday, a visibly angry President Uhuru Kenyatta told off those talking of a split in East Africa Community arising from infrastructural projects

Presiding over the ground-breaking of the Sh1.2 trillion standard gauge railway line that will connect Uganda, Rwanda South Sudan and DRC Congo, Mr Kenyatta termed such talk as nonsense.

Rwanda, Uganda and Kenya have broken from Tanzania and Burundi to form “the collation of the willing” joining hands to launch several multi-billion projects and fast-tracking protocols that are meant to speed up regional trade.

South Sudan is part of this coalition, though her application to join the trading bloc is still pending.

ECONOMIC REALITY

However, behind the strong sentiment by President Kenyatta, is a reality that though Kenya and Tanzania remain united in pursuit of an integrated regional bloc, the pair will be competitors when it comes to doing business with the landlocked neighbours.

The battle for economic superiority has now narrowed to the ports, railway, roads and airport as both countries contend for most efficient transport hub serving landlocked countries in the East, Central and Southern Africa.

President Kenyatta’s commissioning of the first phase of Kenya’s modern railway is a clear signal of the country’s intend to step up its battle for control of East Africa’s transport business.

“Improved infrastructure on the northern corridor will increase business volumes for our port,” said Mr Kenyatta.

Tanzania, on the other hand, has stepped up its desire to snatch business from Kenya launching the construction of one of the regional largest port at the coastal town of Bagamoyo, 60 kilometres north of Dar-es-Salaam.

The $11 billion (about Sh946 billion) port is set to tilt the balance of trade in favour of Tanzania. Once completed, the port of Bagamoyo will handle almost 20 times the combined cargo capacity of both Dar-es-Salaam and Mombasa ports.

Bagamoyo will have the capacity to handle 20 million containers a year, against Mombasa’s installed capacity of 800,000 and Dar es Salaam’s 500,000.

Mombasa is, however, pushing for the completion of a second container terminal at Kilindini harbour at a cost of Sh28 billion.

The new terminal shall double the port’s handling capacity upon completion in 2016.

Like all the regional projects, the port is being funded by the People’s Republic of China.

KENYA AGAINST TANZANIA?

By 2017, Tanzania is set to have four ports while Kenya will boast of only two - a situation that may significantly shift the flow of trade.

A World Bank Survey, the 2012 Worldwide Logistics Performance Index shows that Dar-es-Salaam has overtaken Mombasa as the region’s best-ranked port.

Dar is now becoming the port of choice for many importers in Rwanda, Burundi, DR Congo and parts of Uganda because of improved road and rail network, and less non-tariff barriers along its roads.

Tanzania is also spending $330 million (about Sh28 billion) modernising its railway network connecting its ports to Zambia, Burundi, Rwanda DRC and eventually Uganda.

With a massive new port, christened African Dubai, and railway construction linkage to the central corridor, Tanzania stands tall and would become an economic force to reckon with in the region should Kenya fail to revamp its infrastructure in time.

The upgraded Tanzanian central line on standard gauge is expected to carry 35 million tonnes of freight annually.

In comparison, the East African standard gauge railway to be operational by 2018 is poised to haul 28 million tonnes of cargo every year between Kenya, Uganda and Rwanda.

TANZANIAN THREAT

Appearing before a parliamentary committee two weeks ago, Transport and Infrastructure Cabinet Secretary Michael Kamau said Kenya’s status as the gateway to East Africa was under threat from Tanzania.

Mr Kamau told the committee on Transport that the port of Mombasa, Lamu Port South Sudan Transport (LAPSSET) corridor project are only as valid as Kenya remains a regional transport hub.

“This is Kenya’s chance to prove that it is an economic powerhouse by linking East and West Africa failure to which the economic loss may be huge,” he said.

The threat to Kenya is further amplified by the fact that its railway presents the shortest distance to sea for most of the landlocked countries.

The port of Mombasa has traditionally served Uganda, Rwanda, Burundi, DRC and South Sudan.

Kenya Ports Authority data indicates that the number of Ugandan traders remain the largest in Mombasa accounting for up to 4.85 million tonnes of cargo last year.

South Sudan comes second importing 766,656 tonnes of cargo or 11.6 per cent with the Democratic Republic of Congo holding the third position with 500,000 tonnes.

Persistent inefficiencies at the Mombasa port that lead to lengthy clearance and delivery procedures has seen Rwanda and Burundi considerably slash their trade from 60 per cent a decade ago to just 20 per cent.

The two nations have also cited high transport costs when ferrying goods from the port of Mombasa, which have led to increased prices of goods to the final consumer.

Kenya is, however, shifting from manual port clearance to electronic system in a bid to reduce time taken to clear goods at the port and maintain competitiveness amid rivalry from Tanzania.

The National Single Window System is to later link port clearance processes to banks to enable traders complete every bit of their transactions online.