Mombasa's life ebbs away after SGR cargo directive
- The county government is also feeling the loss. County Executive Committee member Maryan Mbaruk said that they have missed their revenue targets.
- The mandatory haulage of cargo by SGR is seen as a government strategy to maximise revenue as the country moves to repay billions borrowed from China for construction of the rail.
Mohammed Ali, who has been selling vehicle spare parts in Changamwe, Mombasa, for the past 12 years, is packing up.
He says he has bought a plot in Naivasha, where he wants to move his business. He has another shop in Nairobi which he says he’s stocking up.
Why is he closing the Mombasa business? “We have had to send 15 workers home from our two outlets in Mombasa because business is bad. We expect that by the time the Nairobi-Naivasha phase of the standard gauge railway is complete, we shall have put up a number of outlets in Naivasha,” Mr Ali told Saturday Nation.
In the coastal town, the number of residents losing jobs keeps growing as businesses grapple with a dying economy.
Even matatu investors are struggling. Mr John Mwamburi, a matatu driver operating on the Magongo to Docks route, the main public vehicle station to the port of Mombasa, says he has been forced to change routes.
“The route from Magongo to Docks is no longer profitable. Clearing agents used to travel throughout the day but now we only make money in the mornings and evenings, ferrying the permanent port workers. We decided to start plying the Magongo-Likoni route to remain afloat,” said Mr Mwamburi.
Crowding of matatus on this route has not made things any easier though.
As the SGR edges out trucks in cargo transport, the businesses that relied on lorries have been forced to migrate as others take up alternative ways of eking out a living.
The economic downturn has affected hotels, bars, lodgings, fuel stations and vehicle garages.
In the 18 months the SGR has been in operation, Mombasa has seen a sharp decline in fortunes.
Mombasa risks becoming a ghost town as streets become deserted, and hotels, lodgings and commercial and residential houses empty out.
Port-related businesses have shifted to Nairobi as container freight stations (CFS) and clearing and forwarding offices move to the Inland Container Depot (ICD) in Embakasi.
This has resulted in loss of jobs for hundreds in Mombasa.
Landlords in Changamwe, a region with the majority of CFSs and clearing and forwarding agents’ offices, have reduced rents due to presence of few tenants.
“I used to host five clearing and forwarding agents and a CFS yard, but they have all left. The houses are vacant and we are struggling to pay loans that we took to build the houses,” says Mr Peter Karanja, a landlord.
Hotel owners in Shimanzi, Ganjoni, Changamwe and Makupa barely have patrons. Food vendors are migrating to other towns.
Ms Mwanaisha Juma, a food vendor in Shimanzi, says since CFSs closed down, she only gets Sh600 as profit from her food business on a good day, down from Sh1,400 when the business was at its peak.
“I now depend on passers-by to get my daily earnings after a number of godowns were closed. I used to depend on casual labourers but all were sacked eight months after the introduction of SGR,” she says.
The business-wilting effects of the SGR freight services have spread to towns along the Mombasa-Nairobi highway, such as Mariakani, Mackinnon, Voi, Mtito Andei, Emali and Masimba, which mainly depended on truck drivers.
Truck companies, which employed thousands of drivers and turnboys, have been forced to lay off their staff.
According to the Kenya Long Distance Truck Drivers Association (KLDTDA), more than 800 truck drivers who had been operating on the Mombasa-Nairobi highway have been rendered jobless so far. And the situation could get worse.
Mombasa County government is also feeling the loss. County Executive Committee member Maryan Mbaruk confirms that the county has missed its revenue targets.
“The County of Mombasa missed its revenue target by 40 per cent and it will also fail to collect more than Sh17.3 billion due to closure of various businesses,” said Ms Mbaruk.
“If this problem will not be resolved, it is predicted that county revenues will continue to dwindle by 12 per cent every year.”
The Kenya Association of Manufacturers (KAM), Kenya Transporters Association (KTA) and Kenya National Chambers of Commerce and Industry, have all confirmed the sacking of hundreds of workers.
Thursday’s meeting at Senate to discuss the standoff between the government and traders as a result of the government’s move to compel all importers to use the SGR, aborted when key government officials failed to turn up.
“We travelled in big numbers to meet Transport Cabinet Secretary James Macharia and Kenya Revenue Authority officials at the Senate but the meeting was called off after they failed to attend. We feel disappointed as we are really suffering in Mombasa,” said Mr Salim Karama, one of the transporters, said.
Road transporters and CFS owners have accused the government of violating the World Trade Organisation (WTO) rules on trade facilitation to allow for free flow of cargo by the most cost-effective means.
The mandatory haulage of cargo by SGR is seen as a government strategy to maximise revenue as the country moves to repay billions borrowed from China for construction of the rail.
The first instalment of the Sh324 billion SGR loan is due in January next year. But the move looks like a double-edged sword as the government might lose about Sh2 billion in revenue due to job losses.
The government will lose out on the Sh675 million advance tax that it gets from more than 15,000 trucks yearly, 30 per cent corporate tax paid by companies, 16 per cent VAT, income tax, import tax and railway development levy from the stakeholders as businesses close shop.