SGR – a blessing or a menace?

21

By Fuad Ibrahim

Hundreds of thousands residing in Mombasa and the in coastal region directly or indirectly depended on the Mombasa port by either working in the port or working in port related enterprises like clearing and forwarding companies. With new policies introduced mainly brought about the Standard Gauge Railway (SGR), things are not going as glamorous as before.

SGR is the most costly project ever undertaken in Kenya, consuming close to $4 billion. The completed phase one has already connected Mombasa to Nairobi, phase two, connecting Nairobi to Nakuru is already ongoing with plans to reach Malaba in Western Kenyan where it will link to Uganda.

The mega project was considered as a big relief in easing movement of both people and goods and also minimizing the tear and wear on the highways. While it has served this purpose to some extent, not everyone is happy. To many, especially locals of the coastal region, the project proved disruptive, killing businesses and causing colossal job losses.

The Port of Mombasa is the regions economic backbone, employing hundreds both directly and indirectly. Prior to the SGR project, business in the port thrived; logistics, clearing and forwarding companies and other related business thrived despite some challenges including KRA restrictions, high taxation, congestion and dwindling numbers of investors who sought efficiency in other regional ports including Dar es salaam.

When the SGR started operations, the government directed that all goods intended for destinations other than Mombasa be sent to Nairobi where the clearance would be done.  This proved a nightmare. Logistics and clearing and forwarding business crumbled owing to the transit to the Government’s dry port transit order.

Even for those companies that relocated, they were not able to do so with all their staff. Many are those that could not afford to relocate and a number of them have since closed shop. The few still surviving have taken on austerity measures, mostly shrinking their staff numbers while most are barely surviving, going months on end with paying employees. 

Juma Omari ran a small-scale clearing and forwarding agency in Mombasa. He was forced to relocate to Nairobi. While his employees were willing to tag along with him he afford it owing to the logistical nightmare of relocation.

Ahmed, yet another victim, talking to this writer says his agency business before the change of the tide employed over 20 people but was forced to cut the size to less than five and yet the firm is unable to carter for the wages. Business, he says, nosedived especially after several new directives by KPA that drastically reduced the number of containers that they can clear at the Mombasa Port.

Then, it has recently been find out that a number of Chinese clearing and forwarding agencies joined businesses competing with the existing locals in clearing and forwarding. With China exporting to Africa more than other super powers, Chinese clearing and forwarding companies are said to be flourishing, edging out further, the local companies.

The SGR meant that operations that were meant to take place in Mombasa were forcibly moved to Nairobi. Plans are aboard to diversify port activities even further to Naivasha with the impending operationalisation of phase two of the SGR. Protests by local leaders, notably, the Mombasa County Governor, Ali Hassan Joho that the move will kill the economy of the region fell on deaf ears.

Another heavily hit sector is the container freight stations (CFS). Dozens of such facilities operated in Mombasa. Government has since asked these companies to move and establish bases in Nairobi.

It did not stop there, KPA also ordered, in the new directives, that containers destined to Mombasa for local clearance will not be nominated by CFS. “The nomination shall be done by KPA based on vessel rotation, volumes, and individual CFS capacity; you are required to inform your clients in your various ports of loading accordingly,” read the KPA directive in part.

Other than the job losses from this attempt by KPA to cut off the container freight stations from business, billions of shillings are also stake. The KPA directive means that over sh20 billion investments value for CFS will go to waste having nothing to do.

Then the government also directed that all un-nominated containers belonging to upcountry importers be transported via SGR and not via trucks that have in the business. This has left truck owners, drivers, a number of jobs and other related businesses hanging on the shorter end of the stick, not to mention satellite town that emerged along the highways and that shouldered the economies of the communities along the Mombasa-Nairobi, Nairobi-Eldoret, Nairobi-Kisumu, Eldoret Malaba and Kisumu-Busia highways. This cut across the counties, from Mombasa County through Kwale, Makueni, Machakos, Nairobi, Nakuru, Uasin Gishu, Kericho, Kisumu, Busia and Bungoma. These towns and going to stunt and with them, the hopes and aspirations of the communities around them.

SGR has the capacity of transporting 300 containers daily. This means nothing, once the agreement is fully implemented, will be left for the trucks. it is not clear why the government favored the SGR at the expense of the trucks, it is however rumored to have been part of the between the Chinese operators of the SGR and the Kenyan Government.

While the SGR is a good thing to the country and all efforts should be in place to ensure its benefits to the locals are ripped to capacity, mitigating factors need to be put in place to ensure that its disruption to the status quo is not overly negative.