Bill on Mombasa Port will create trade barrier - regional traders

Importers and exporters using the Northern Corridor have protested the passing of a Bill by the Mombasa County in Kenya that seeks to allow the county to collect port revenues

Monday January 4 2016

By Monitor Correspondent

KAMPALA. Importers and exporters using the Northern Corridor have protested the passing of a Bill by the Mombasa County in Kenya that seeks to allow the county to collect port revenues.
They say the Mombasa County Port Authority (MCPA) Bill 2014 passed on December 10, will impose double taxation on business transactions on the transit route that links Uganda, Rwanda and Burundi with the port.

The Bill, currently awaiting assent by Governor Hassan Joho, seeks to create the County Port Authority, headed by a chief executive, to manage the port and set up an electronic Advanced Shipment Information System to monitor cargo and help in revenue collection.

Many businesses have termed the Bill unconstitutional and asked the governor not to assent to it.
The Bill comes amid concerns at the Kenya Maritime Authority that counties on the Northern Corridor are imposing levies that are likely to increase the cost of doing business.
The Association of Importers of Kenya chairman, Mr Peter Mambembe, said the proposed MCPA is unconstitutional, as it did not follow the legal procedure of public participation.

“There was no public participation in line with the provisions of the law,” he said.
Mr Mambembe said the Kenya Association of Manufacturers, the Car Importers Association of Kenya, the Kenya International Freight and Warehousing Association, the Container Freight Stations Association of Kenya and his organisation were not involved.
Based on the 2014 figure of 24.9 million tonnes of cargo handled at the port, this means that the county would earn $1.2 billion from the levy.

This is the kind of money that the county chiefs are craving, given huge deficits in the devolved units’ annual budgets.
Mombasa collects about 21 million in revenue annually. In the 2014/2015 financial year, the county received 42 million from the national government against a budget of $115 million, leaving a deficit of about $57 million.
“By January we expect that the authority will be in place, establish the online system and start collecting the levy. We will also factor the revenue in our next budget,” said Mr Thoya.

Mr Mambembe, however, warned that the law will scare away users of the port, which is already facing competition from the port of Dar es Salaam, to which TradeMark East Africa, the Unied Kingdom’s Department for International Development (DfID) and the World Bank are funding a $565 million upgrade.
It is expected the project will boost cargo handling capacity from 14.6 million tonnes in 2013/14 to 28 million tonnes by 2020, posing serious competition to Mombasa port.

Ugandan factor
Uganda continues to maintain a dominant position as the leading transit cargo destination, accounting for nearly 77 per cent share of the total transit traffic, according to Kenya Ports Authority statistics.
Overall, Uganda traffic grew from 4.9million tonnes in 2013 to 5.5million tonnes in 2014.
In 2014, the port handled a total of 1million containers against 894,000 handled in 2013. This was as a result of handling Ugandan cargo which increased by 609,000 or by 12 per cent.