Despite the considerable lax of trade restrictions across boarders, high transport costs are emerging as the new business hurdle for East African ventures. This was aired by the Kenya Shippers Council (KSC), CEO Gilbert Langat in Nairobi during the council's meeting on Logistics Performance Index for East Africa over the weekend.
Shipping is seriously hampered by the current pace and according to the report, it is back-pedaling regional economic growth by at least one per cent yearly. The most affected are EAC landlocked partners like, Burundi, Rwanda and Uganda, whose development heavily depends on transit solutions from neighboring Kenya and Tanzania.
He said transport costs in East Africa were between 60 -70 higher compared to the United States and Europe. High level of development in those continents maybe a scape goat factor but those values are also 30 per cent higher compared to say, Africa’s newest nation, land locked Southern Sudan.
“Dar es Salaam and Mombasa ports have cumulatively experienced an annual average growth in cargo through-put of an estimated 8.8 per cent…” Langat explained adding that the ports have failed to keep up with the rate of growth and as a result over the past decade experienced delays and congestion.
A number of reforms are underway, Langat assured East Africans, saying they are working around the clock to construct additional terminal facilities and input automation of the container handling processes and also to improve efficiency of documentation and cargo clearance, verification and scanning.
The Northern Corridor, which links Mombasa to several of the East African landlocked nations and its counter part the Central Transport Corridor, which connects Dar es Salaam to these same countries individually account for annual cargo volumes in excess of 10 million tons and a combined transit and trans-shipment traffic of more than two million tons.
"Trade along these corridors has a positive impact on the region and many initiatives have been undertaken to improve efficiency…" he underscored but noted that bureaucratic clearance and congestion consumes time and money. He went on to point other factors limiting trade in the region as inadequate physical infrastructure and national policies that are incompatible with the EAC goals for regional integration.
He emphasised the need for special attention to swiftly resolve factors undermining the shipping business or face loosing business to Port of Beira (Mozambique) where apparently, the costs are much reasonable and the services are efficient.