China-built railway in Kenya to lose business, shifting costs to taxpayers
In one of his first acts in office, Kenya’s new president, William Ruto, ordered cargo containers from incoming ships to be emptied at the port of Mombasa rather than the capital, Nairobi. Ruto said he was keeping a campaign promise, although there are fears the move could overwhelm Mombasa port facilities.
In 2019, the Kenyan government moved cargo clearance operations from Kenya’s Indian Ocean port of Mombasa to the inland cities of Nairobi and Naivasha.
This week, Ruto ordered that operations be moved back to Mombasa.
“I will give instructions for clearance of goods and other operational issues to be returned to Mombasa Port as I have pledged to Kenyans,” Ruto said. “This will restore thousands of jobs in the city of Mombasa.”
Former President Uhuru Kenyatta had moved cargo clearance to Nairobi to increase use of the standard gauge railway, which was built with a $4.5 billion loan from China. The move forced companies to pay transportation costs to use the railway – a move Kenyan officials saw as the best way to repay the loan.
Ruto’s move, announced on Tuesday, is welcomed by newly elected Mombasa Governor Abdulswamad Shariff Nassir, who said the need to repay debt is no reason to kill business at his city’s port.
“We have been fighting for this for a long time and we have said it openly, even if it was to pay off the debt of the SGR, there are other ways to pay it back. It is not essential to kill the economy from part of the country.
According to the 2022 economic study, the use of RMS increased by 22.6% in 2021 and brought in $108 million, compared to $87 million in 2020. The increase is attributed to cargo shipments to Nairobi.
With customs clearance operations returning to Mombasa, many fear that the railway will lose business to trucking companies, making it difficult for the railway to pay its debt and ultimately transfer the cost of its construction to taxpayers.
Some traders have argued that historically the Port of Mombasa has been slow to unload and transport cargo containers.
Gerrishon Ikiara, an economics professor at the University of Nairobi, predicts that the Port of Mombasa will not be able to handle the increased liabilities.
“Very soon, we will start to feel the impact of late loading and other inconveniences, overcrowding on the Mombasa highway and corruption at the police station at every turn.”
Alfred Omenya, an expert in governance and urban development, hopes the problems can be overcome if the government appoints good managers to run the port.
“I think the president did the right thing,” he said. “We hope this is not an ad hoc political action, but it will be an action that will be based on consistent planning, consistent strategy and consistent development of our country.”
In the worst-case scenario, congestion and corruption at the port of Mombasa will cause traders from neighboring countries to flock to other ports, causing Kenya to lose much-needed development revenue and debt servicing.