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By IBTimes Staff Reporter
on July 25 2013 6:25 AM
A general view is seen of the container terminal at the main port in the Kenyan coastal city of Mombasa. Reuters/Joseph Okanga
International trade has always been a complicated process for landlocked African countries such as Uganda and Rwanda, which have no other choice but to use neighbors' ports to send and receive goods shipped via the Indian Ocean.
The two main byways are Dar es Salaam in Tanzania, and Mombasa in Kenya. And, both ports are plagued by inefficiencies -- traffic jams at sea, cargo congestion on land, and mountains of red tape. But, a healthy competition has sprung up between the two countries, both of which want to attract as much trade as possible while maximizing profits, and are trying to outdo each other to streamline operations.
In a bold move sure to curry favor with its landlocked neighbors, Kenya is easing trade operations by cutting out the middle man -- itself.
Beginning in August, Rwanda and Uganda will be allowed to levy customs duties on their own goods as soon as they are cleared upon arrival in Mombasa. This will radically streamline the current system, as Ugandan and Rwandan importers are often hamstrung by paperwork at the Kenyan port in order to clear their cargo, and then are forced to pay import duties when crossing from Kenya to their own country.
"Once cleared at the port, there will be no stoppages at borders and checkpoints along the corridor," said Beatrice Memo, customs commissioner for the Kenya Revenue Authority, according to Reuters.
The change is part of a broader push, spearheaded by Kenyan President Uhuru Kenyatta, to make Mombasa more efficient and attractive to international traders. The president aims to concentrate customs paperwork at Mombasa rather than in the capital city of Nairobi, upgrade cargo-weighing procedures, improve transit infrastructure and digitize the clearing process.
But the decision to give Uganda and Rwanda more autonomy at the port has come up against steadfast criticism from Kenyan clearing and customs officials who profit from the red tape at Mombasa. The Kenya International Freight and Warehousing Association, for instance, argues that half a million jobs will be lost to Uganda and Rwanda as a result of the new decision.
Tanzania has good reason to worry about these new upgrades. Its port at Dar es Salaam handled about 12.1 million tons of cargo last year and it has long been trying to catch up with Mombasa, which handled 21.9 million tons of cargo in the same period, according to Bloomberg.
