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Kenyan traders and freight agents have expressed their intent to reroute their cargo through the Port of Dar Es Salaam due to the newly imposed 2.5% vehicle tax by the Kenyan government.
This move has sparked significant concern among the business community, who view the additional tax as an unsustainable burden.
The traders argue that the Port of Dar es Salaam presents a more business-friendly environment compared to the Port of Mombasa. According to various reports, the Tanzanian port has significantly improved its services, making it a formidable competitor to Mombasa, which has been grappling with inefficiencies
The primary reasons for this potential shift include shorter transportation times and better efficiency in handling cargo. A 2022 World Bank report ranked the Port of Dar Es Salaam ahead of Mombasa in terms of efficiency, placing it at position 312 compared to Mombasa’s 326 out of 348 global ports
Gilbert Langat, CEO of the East Africa Shippers Council, stated that there has been a significant increase in the number of traders from Uganda and Rwanda using the Port of Dar Es Salaam due to these improvements. This shift has contributed to a reduction in the cargo volume passing through Mombasa from 75% to 63% in the last quarter of 2022
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The Port of Mombasa has faced several challenges, including congestion and prolonged cargo clearance times, prompting traders to seek alternative routes. Data from the Kenya Ports Authority (KPA) indicated a decline of 18.9% in cargo handled from Tanzania, Burundi, Rwanda, and the DRC in the first nine months of the previous year
Gerald Kagumo, Vice Chairman of the East Africa Freight Forwarders Association, added that delays at Mombasa have driven traders from neighboring countries to turn to Dar Es Salaam. “We are losing business to Tanzania due to inefficiency at our port,” Kagumo remarked
If the Kenyan government does not take swift action to address these issues, the Port of Dar Es s Salaam stands to benefit greatly from this shift in trader preference. This could have significant economic repercussions for Kenya, particularly in the transport and logistics sector. Both Tanzania and Kenya’s governments should engage in discussions to find cooperative ways to enhance the business environment for the mutual benefit of both nations.
The dissatisfaction among Kenyan traders with the new tax policy and the inefficiencies at the Port of Mombasa may lead to increased reliance on the more efficient Port of Dar Es Salaam, potentially reshaping regional trade dynamics.
