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TIME TO REFORM
EAST AFRICA’S PORTS?
East Africa has long been plagued by inefficiencies at
ports, and within transport corridors. In mid-2012, shipping
companies spent an extra 22% on top of normal operating costs
to clear container cargos, while collectively shippers forked out
an additional $252 million calling at Dar es Salaam port alone,
owing to berthing delays.1 Even though policy makers in the
region recognise the need to expedite trade flows in East Africa,
not enough is being done to address delays in the major ports,
which restrict trade flows and costs businesses time and money.
Is it time for governments in the region to cede responsibility
of its ports to private operators to boost efficiency and remove
trade barriers?
... collectively [in
2012] shippers
forked out an
additional $252
million calling
at Dar es Salaam
port alone, owing
to berthing delays
vehicles . . .
1
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TIME TO REFORM EAST AFRICA’S PORTS? | 2
For a region considered as a major future energy player, East Africa’s
inefficient port and transport network continues to burden domestic and
foreign business. Cumbersome border procedures, road blockages and
port congestion - known collectively as Non-Tariff Barriers to trade (NTBs)
- plague companies by driving up the time and cost of doing business
in east and central Africa. Not only does this impact on the East African
economy, it deters foreign businesses from operating and investing in the
region. It is not hard to see why: according to the World Bank in 2013, the
Tanzanian trade corridor, which stretches from Dar es Salaam (Tanzania)
through to Lusaka (Zambia), is recognised as one of the world’s most
expensive routes through which to move cargo. Similarly, the northern
trade passage dissecting Kenya and reaching up to Uganda and South
Sudan is dogged by expensive clearance procedures and weighbridges
placing additional strains on freighters moving goods in and out of East
Africa.
. . . the Tanzanian
trade corridor...
is recognised as
one of the world’s
most expensive
routes through
which to move
cargo.
However, one of the root problems which blights the supply chain in East
Africa is the region’s highly congested gateway ports (Mombasa and Dar
es Salaam), which are dogged by inefficiencies and clearance delays.
It is not uncommon for ships calling in Mombasa to be held-up for up
to 10 days before being processed and eventually cleared. Such delays
are even greater in Dar es Salaam, which take ships on average up to 10
days to berth, and an additional 10 days to clear cargos at port.2 Not only
does this expose cargos to criminality and misconduct, but it suspends
deliveries to their final destination - a cost ultimately footed by private
companies operating in the region.
It is not
uncommon for
ships calling in
Mombasa to be
held-up for up to
10 days before
being processed
and eventually
cleared.
Although regional policy makers have made moves to tackle congestion,
particularly in the last six months, it continues to be a costly region to
operate in, so much so that companies are known to bypass the gateway
ports altogether in favour of smaller ones such as Beira (Mozambique)
and Mtwara (Tanzania). If East Africa is to capitalise on the huge resource
potential within its gas-rich basins, along with the increase in business
interests in the East African Community (EAC), it is essential that the
region is serviced by an efficient port network, meaning that significant
changes are required to streamline the current state-managed ports. The
sticking point is that governments are not prepared to cede control of the
ports in favour of private operators, despite calls in the region for change,
particularly from Uganda and Rwanda.
2
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TIME TO REFORM EAST AFRICA’S PORTS? | 3
Many have urged Kenya and Tanzania to hand over responsibility of its
ports to external operators. Such a move would help remove operational
inefficiencies and corruption, while boosting competition and business
generation at the interface of East Africa’s trade passage. The Kenya Port
Authority has been found seeking bribes 3 to facilitate goods clearance,
and the Tanzanian Port Authority has recently been investigated on claims
of fuel smuggling, corruption and goods ‘disappearances’. While small
personnel changes have been made in the Tanzanian Port Authority,
following allegations of corruption in February this year, Dar es Salaam
continues to restrict economic development in the region. Likewise,
Kenya’s recently elected President, Uhuru Kenyatta, has confirmed that he
will not look toward the private sector to reform Mombasa Port, despite
recognising the need to tackle congestion and corruption. Instead, he is
addressing trade barriers by making small management changes at the
top of the port authority, and making small legislative changes along
Kenya’s transport corridors. This, it is generally agreed, will not bring
about the type of change needed to boost the efficiency of operations in
Mombasa. While Dar es Salaam has had a helping hand from privatesector contractors since 2000, the improvements have been offset by the
government managed port authority. It appears that Kenya and Tanzania
are not prepared to compromise their stake in their ports, despite the
improvements it would undoubtedly bring to the regional economy.
Kenya’s
President, Uhuru
Kenyatta, has
confirmed that
he will not
look toward the
private sector to
reform Mombasa
Port...
Apart from increased rhetoric and future proposals to develop ports,
notably the ‘mega port’ and transport corridor at Lamu (LAPPSET project),
the Tanzanian and Kenyan governments are failing to tackle entrenched
efficiencies at its existing ports. State-run Mombasa and partly state-run
Dar es Salaam lack operational capability and are hindered by a culture
of bureaucracy and corruption, largely arising from the country’s staterun port management. It seems that little is actually being done to ease
trade at port other than minor personnel changes and adjustments to
borders procedures along trade corridors. Kenya has flip-flopped over
plans to privatise Mombasa in the past, and is highly influenced by the
strong role the unions play in opposing such plans. Not wishing to upset
the applecart and cut local jobs in Mombasa port sector, it looks likely in
2013 and beyond that President Kenyatta will take a soft approach to port
reform and not hand control over to the private sector. In East African in
ports, the management and bureaucracy are recognised as both a source
of inefficiency and a direct result of inefficiency. As many regional and
The Tanzanian
Port Authority
has recently
been investigated
on claims of
fuel smuggling,
corruption
and goods
‘disappearances’…
3
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TIME TO REFORM EAST AFRICA’S PORTS? | 4
management and
bureaucracy are
recognised as both a
source of inefficiency
and a direct result of
inefficiency…
international players recognise, and have done for many years, this is
unlikely to change unless governments look toward the private sector to
operate and manage the ports.
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