The SGR breaks monopolies and lowers prices for us all
To make matters even more absurd, the Ugandan and Rwandan importers refused to have any part of this.
They called the bluff of the Mombasa powerbrokers and got special privileges to circumvent the CFSs.
Thus, the same imported goods are cheaper in Uganda than in Kenya, even though they are imported through Mombasa!
There are many reasons why goods are getting more expensive. The most palatable one is that the quality has increased. This is true of some goods, yet unfortunately not for the majority of things we find in the market and on our supermarket shelves.
High fuel prices indeed impact the cost of imports, but this should be marginal and in line with the global markets. However, the most detrimental and unique factor causing price hikes in Kenya, in my opinion, is the problem of monopolies.
The renewed protests of truck drivers in Mombasa reminded me of this. It seems that their grievances and fears are being exploited by powerful and shady individuals with personal business interests, namely, to resist change at all costs. But we can all agree that the current system is unsustainable.
To better understand the root causes of the current mess, we must delve into some history.
The new, expanded Mombasa port has the potential to become the logistical hub for Kenya and most of Eastern Africa. Its massive expansion could have been an amazing opportunity to put Kenya on the international trading map. Unfortunately, the facilities around the port supporting its logistical operation simply weren’t adequate.
As all can see, it is hardly efficient to take goods off a boat, put them through customs, wait for a truck and then put a single container on that truck. The inevitable delays to clear and send goods cost importers a lot of money – costs that they then roll on towards the customer, or to be more explicit, towards each and every one of us.
To make matters worse, the storage and loading facilities around the port were much too small to handle all the new traffic. Thus, savvy businessmen who own lots of land in and around the city jumped on the opportunity and offered to provide much-needed storage units so that the container terminal would be freed up. Of course, they demanded a hefty fee for this service.
Out of options and fearing the collapse of the Mombasa port due to backlog, the Kenya Ports Authority licensed these storage units and called them Container Freight Stations (CFS). As the profit margin was huge, they sprung up all around the city.
Now, these CFSs didn’t add any value to the product. They didn’t repackage imports or prepare them in any other way. They only gave them a roof before they would be sent on, usually to Nairobi or Uganda. A few members of the elite profited immensely, and their bill was paid by us.
To make matters even more absurd, the Ugandan and Rwandan importers refused to have any part of this. They called the bluff of the Mombasa powerbrokers and got special privileges to circumvent the CFSs. Thus, the same imported goods are cheaper in Uganda than in Kenya, even though they are imported through Mombasa!
Bur fortunately, now with the SGR, this monopoly has been broken for us Kenyans too. The new terminal swiftly and efficiently takes the cargo straight from the boat on to the train, before it is sent inland and redistributed. As the train doesn’t get to every corner of the country, and isn’t connected yet to our neighbours either, truck drivers still have plenty of work.
And now, their work is less dangerous and less costly. Instead of jamming the important Nairobi-Mombasa highway, the SGR transports the goods swiftly on an alternative route. Instead of causing deadly traffic accidents and creating potholes on our most important national roads, the trucks are now more thinly dispersed across the country.
Thus, the SGR really is a project of national importance, and the citizens of Mombasa protesting against this important infrastructure development should know that they are being played by shady types who don’t care about them nor about anyone else except themselves.
Mr Mugolla comments on topical issues.