Global shipper Maersk warns of polls risk to Kenya’s hub status

Containers at the Mombasa port. file photo | nmg 

By JAMES KARIUKI

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Summary

• A number of landlocked traders have indicated plans to shift their import activities to the Dar port in the run-up to Kenya’s August 8 polls.
• Maersk says competition pitting Mombasa against Dar is already heating up from ‘swing’ countries “specifically Rwanda, Burundi, and Uganda.”
• This comes as Rwandan and Ugandan traders remained locked in a court battle with Kenya seeking compensation for losses incurred in the 2008 post-election violence.

Shipping conglomerate Maersk Line has warned Kenya’s rising star as a containerised cargo transit point could wane if the August election disrupts operations along the Kenya-Uganda and Kenya-Tanzania transport corridors.

Maersk managing director East Africa Steve Felder said the appeal of cross-border infrastructure such as standard gauge railway (SGR) and oil pipeline could be undermined by another post-election violence.

Kenya has completed 472-kilometre section of the SGR from Mombasa to Nairobi and plans to extend it to Malaba through Naivasha and Kisumu. “The development along the Northern Corridor highly depends on the Kenyan elections and the extent to which they are peaceful. We expect a short-term reduction in the import market followed by a very quick recovery after the August elections,” said Mr Felder when he released the firm’s first quarter trade report.

The Mombasa port serves Kenya, Uganda, South Sudan and parts of Rwanda. According to the report, containerised imports grew on the Northern Corridor by one per cent compared to the Dar es Salaam’s Central Corridor which suffered a 12 per cent contraction.

A number of landlocked traders have indicated plans to shift their import activities to the Dar port in the run-up to Kenya’s August 8 polls.

Maersk says competition pitting Mombasa against Dar is already heating up from ‘swing’ countries “specifically Rwanda, Burundi, and Uganda.”

This comes as Rwandan and Ugandan traders remained locked in a court battle with Kenya seeking compensation for losses incurred in the 2008 post-election violence.

“Drought conditions in Kenya, political instabilities in various regions and the interest rate capping on the bank lending rate in Kenya are some of the factors impacting trade on the Northern Corridor,” the Maersk report says.

Mr Felder expressed optimism that if the interest rate cap decision was reviewed, liquidity could increase boosting trade and increasing buying power.

The Maersk report shows Mombasa enjoyed a year-on-year growth of six per cent in the first quarter but declined marginally by one per cent compared to the fourth quarter of 2016. “In Kenya, which represents around two-thirds of containerised demand in the corridor, tea — the biggest export in containers by volume — saw a market drop of about 20-25per cent during the first quarter. There was also a reduction in soda ash volume — an input material for the manufacturing of glass — given the changes in market demand, as well as fish exports from Lake Victoria due to over-fishing,” it added.

Mr Felder welcomed recent laws by Kenya that encourage foreign manufacturers to establish local subsidiaries at Special Economic Zones, thereby creating local jobs while enjoying tax-free access to their traditional export markets.