EA traders watch upcoming Kenyan elections warily

Protestors in a Bujumbura neighbourhood last year. Such scenes jitters over Kenya’s general election in August are impacting trade volumes in the EAC. PHOTO FILE | AFP 

In Summary

• Central Corridor is feeling the pressure of the instability in Burundi, with a significant contraction in business in the first quarter of this year.
• Tanzania unveiled a $154 million plan to expand the Dar es Salaam harbour to transform it into a regional transport and trade hub to compete with Kenya’s Mombasa port, a new report shows that the political crisis in Burundi has caused a decline in business for Dar.
• Traders in Uganda are said to fear their business operations could be interrupted in the likelihood of post-election unrest in Kenya, but analysts still argue that the Northern Corridor offers Uganda the best value proposition.

By NJIRAINI MUCHIRA
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The Central Corridor is feeling the pressure of the instability in Burundi, with a significant contraction in business in the first quarter of this year.

Just as Tanzania unveiled a $154 million plan to expand the Dar es Salaam harbour to transform it into a regional transport and trade hub to compete with Kenya’s Mombasa port, a new report shows that the political crisis in Burundi has caused a decline in business for Dar.

While Tanzania and Kenya battle to control who should handle the lion’s share of the imports and exports in East Africa, the crisis in Burundi continues to eat into trade volumes on the Central Corridor.

Data by Maersk Line Eastern Africa shows that the container trade on the corridor that serves Tanzania, parts of Rwanda, Burundi, Zambia, Malawi and the Democratic Republic of Congo contracted by 12 per cent in the first quarter of this year.

In contrast, the Northern Corridor, which serves Kenya, Uganda, South Sudan and parts of Rwanda, saw its volumes expand by one per cent during the same period.

While the Central Corridor hopes to capitalise on the building tension in the run-up to Kenya’s August 8 general election to wrest business from the Northern Corridor, trade analysts say Kenya stands to suffer minimal business losses.

Traders in Uganda are said to fear their business operations could be interrupted in the likelihood of post-election unrest in Kenya, but analysts still argue that the Northern Corridor offers Uganda the best value proposition.

READ: Ugandan traders turn to Dar port as Kenya polls close in

“Uganda imports less than 10 per cent of its goods through the Central Corridor; Ugandan traders will still prefer the Northern Corridor,” said Richard Kamajugo, TradeMark East Africa senior director for trade environment.

The near flat performance of the Northern Corridor was attributed to a drop in export volumes, which declined by 10 per cent compared with the same period last year.

Slowed exports

This was largely due to the drought that hit agriculture and exports of agro-based products, the main items moved through this corridor.

While Kenya accounts for around two-thirds of containerised traffic through the corridor, tea exports, for instance, dropped by about 25 per cent during the first quarter.

Overall, the aggregate trade levels in the region improved slightly since 2016, resulting in year-on-year growth of one per cent.

Steve Felder, Maersk Line Eastern Africa managing director, said that despite conditions continuing to be challenging in response to political instability, flagging economies and drought, there is healthy competition between the two corridors.

Burundi, which has experienced instability since the disputed 2015 polls, imports 90 per cent of its goods through the Central Corridor.

Data by the Central Corridor Transport Observatory shows that Bujumbura imported 348,806 tonnes of goods through Dar in 2015. The imports reduced to about 280,000 metric tonnes last year.

The DR Congo also uses the Central Corridor importing 1.2 million tonnes of goods through the route in 2014 and 1.1 million tonnes in 2015. In total, 11.7 million tonnes of goods entered the region through the Central Corridor.

Despite efforts by Tanzania to expand the port of Dar, trade through the Central Corridor is expected to remain sluggish in the immediate future.

Duty slapped on various products like cement, paper, sugar and furniture is already impacting on demand, thereby thinning import volumes while the ban on mineral ore exports is affecting volumes of outbound cargo.

Kenya hopes to ride on the efficiency of the second container terminal in Mombasa and the recent commissioning of the standard gauge railway to maintain its position as the preferred trade route into the region.

READ: Traders upbeat as Kenya unveils railway project

Despite assertions that the Northern Corridor faces a bleak year courtesy of the Kenyan elections, the corridor is expected to keep a tight grip on its business.

The terminal worth $300 million provides an additional cargo-handling capacity of 550,000 TEUs (20-foot-equivalent units) per year and has significantly increased the port’s efficiency.

Kenya also launched the $3.2 billion railway as the preferred link to its seaport, easing the movement of cargo to inland container depots, further improving the Northern Corridor’s competitiveness.

READ: East Africa watching closely as Kenya preps for August polls