Keep politics out of port privatisation

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BY ROB MACAIRE

I am recently back from a visit to Mombasa and surrounding areas.  We had a chance to see business interests, the Tea Auction, some police training we are supporting, projects with community leaders and volunteers, British nationals and the tourism industry, the EU Naval Force anti-piracy operation, and also of course the Port Authority.

Several times during my trip, I was asked what we thought of the political debate over the privatisation of Mombasa port.  I was lucky enough to be joined by a team of experts from TradeMark East Africa, a body dedicated to improving trade within the EAC, in particular by removing barriers to trade in the crucial ‘Northern Corridor’.  So when we talked to the Port, the Maritime Authority and others, it was with the benefit of international expertise on the running of ports. 

And one thing was clear to me: the choices facing Mombasa port are not a black-and-white question of privatisation or no privatisation.  Many aspects of the port are already in private hands.  If the port wishes to increase its business, it will need greater investment, and greater efficiency.  Perhaps a more relevant question is whether the greater private involvement in the port is to be done transparently, in the best interests of this national asset, or by the back door, serving vested interests.

Sadly, this debate has become distorted by local politicians making it a political football, mainly by playing on fears of job losses.  What seems to be missing is the understanding that a more effective port, with quicker turnaround times, reduced costs and more predictability for importers and exporters will create much more business.  With that business will come a lot more new jobs in Mombasa.  And of course with a more efficient port, the Kenyan economy could really be boosted, creating many thousands of jobs across the country.  

A huge factor in this is the off-take capacity of the port.  Because of the weakness of the railway system, only some five percent of container traffic goes by rail.  The rest is transported by a road haulage system that congests and damages the road network, costs far more for long-distance transport than the railways would, and limits the efficiency of the port.  But it would be wrong to say that off-take is the only problem.  Talking very widely across the shipping and transport industry, everyone pointed to high fees, delays in the bureaucracy of clearing cargoes (sadly linked to corruption), the dubious role of Container Freight Stations that have become more rent-seeking than facilitators, as well as infrastructure and transport challenges.  The port has plans for a ‘single window’ to speed the process, but it seems some way off in practice.  And for many businesses, certainly for high value commodities, inventory costs (ie delays) are an even bigger concern than fees.

Indeed, I came to understand on this trip that the further ‘unblocking’ of the port (and I should note that a lot has already been done to date) isn’t just a great economic opportunity.  It is also an urgent necessity.  With trade volumes increasing at an estimated nine percent, neither the port nor the road system will be able to cope without changes.  But equally, unless it gets cheaper and quicker to trade through Mombasa, Kenya will simply miss out on business.  With Dar es Salaam becoming more efficient, and with ever wider opportunities for global trade, Mombasa can’t afford to sit back.  One of the most depressing things I heard on my trip was a comment attributed to a local politician that, since the port makes a profit, there is clearly no need for change…

It would also be encouraging if the local Kenyan merchant shipping industry could be developed, creating more jobs.  Under the new Merchant Shipping Act, no-one shipping through the port can also provide services on land.  Nor can the major international shipping lines provide the end-to-end service that their customers want.  This seems a perverse rule, favouring a small number of local interests rather than the wider economy, and I gather that the way it emerged into the legislation in Parliament at the last moment raised a lot of eyebrows. 

The discussions I had with various people about piracy while in Mombasa were yet another reminder of how seriously the problem affects the Kenyan economy.  That is why Kenya is playing a leading role in the fight against piracy, including in the Kenyan courts.

And my visit also coincided with the great success by Kenyan police in breaking up a drugs smuggling ring bringing heroin  through the country.  A dramatic operation, for which the authorities deserve full congratulations.  It would be tragic if the boost to the reputation of Kenyan police was wiped out by confirmation of the stories that nearly half the haul has since gone missing.  The allegedly missing heroin represents some Ksh500 million – but it also represents many young lives lost or ruined.  I can understand the huge anger of Coast residents when they see this.  And, as more than one person alleged to me privately, the big criminals don’t need to use speedboats off the coast.  They simply use the port.

(Rob Macaire is the British High Commissioner to Kenya. Follow his blogs here.)

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