13 September 2013

East Africa: Dar es Salaam and Mombasa Ports Fight for Rwanda Business

The port of Dar-es-Salaam in Tanzania may be just 1,380 kms from Kigali by road, but officials there have until now looked on helplessly as almost all Rwandan business slipped passed it to the Kenyan Port of Mombasa, a journey that is about 400kms longer through Uganda.

Slightly above 50% of Rwanda's shipments go through the Northern Corridor route; Mombasa-Kampala-Kigali, and the recent removal of police roadblocks, reduction in the number of weighbridges and improvements in cargo handling at Mombasa is making the route even more user friendly to Rwandan traders.

Confronted by this rude reality, the Government of Tanzania recently dispatched a minister to Kigali on a mission to reassure the business community in Rwanda that the Port of Dar-es-Salaam is also putting behind its inefficient past.

Charles Tizeba, the deputy minister of transport and infrastructure, said congestion at the Port of Dar es Salaam will soon be history and the government had embarked on dismantling non-tariff barriers on the central corridor route.

Just like the Kenyan government did in July, Tanzania is cutting the number of weighbridges from eight to three. Moreover, they will be situated only at entry points. Weighbridges and police roadblocks are the main causes of delays to movement of goods and contribute to the high cost of doing business in East Africa, traders say.

Yet despite that glaring fact, governments have until the recent meeting in Kampala by Presidents Paul Kagame of Rwanda, Yoweri Museveni of Uganda and Uhuru Kenyatta of Kenya maintained numerous checkpoints, weighbridges and police roadblocks.

Officers manning these facilities have been notorious for demanding bribes, adding to the high cost of doing business in a region that pledges to operate a common market and a single customs territory.

A study done by the United States Agency for International Development (USAID) in 2009 on impediments to trade in the region says that in Kenya and Tanzania, the average bribe paid per transaction to a policeman or a customs official is $30 while in Uganda it is between $100-150 per consignment.

Tanzania and Burundi were not part of the Kampala meeting, but Dar too seems to have woken up to the reality that trade barriers are counter-productive.

"We understand the benefits of reducing the cost of doing business; that's why we want to emphasize the new cargo trucking systems, in addition to the new efforts we are putting in place to decongest Dar es Salaam port," Tizeba said during the meeting with traders in Kigali.

Even though the Northern Corridor route had its own share of bottlenecks, Rwandan traders have for long had issues with what they perceived to be Tanzania's reluctance to reduce the number of weighbridges and to decongest the part.

There are also complaints about the amount of money levied as road toll and double weighing of trucks. But Tizeba said that the road toll charged on trucks is computed according to the distance covered and the truck axle load.

"We don't have a flat fee as most drivers are claiming... we charge $6 per 100km for trucks with two to three axles. Those with four and above axle load pay $16 per 100km covered. Therefore, every transporter is charged according to distance covered."

It is these issues that Rwandan traders are demanding for bold action from authorities in Tanzania before they can consider routing their goods through Dar.

"There is still a lot of bureaucracy and inefficiency at Dar that is costing us dearly because of delays," said Alex Mugisha, the executive marketing manager of a local company, Panache.

Dar, he said also lacks modern operating systems.

Theodore Murenzi, the president of the Rwanda Long Distance Truck Drivers Association, says that even the trucking system that the Tanzanian minister spoke of as a new innovation is not properly managed.

"It has been left to private individuals to manage, who on most occasions make it hard for clearing agents to access. This causes delays which sometimes attract unnecessary penalties," he said.

Even as the Tanzanian minister pleaded that those problems will soon be no more, it appears his government will have to do a little more to win back business from Rwanda as frustration seems to have reached government level.

Vincent Safari, the national coordinator in charge of non-trade barriers at Rwanda's Ministry of Trade and Industry, said traders have been complaining about Tanzania's reluctance to remove trade barriers and improve customs efficiency for a long time.

"We have raised the issue of numerous weighbridges and police checks points with Tanzanian authorities many times, but they said they were awaiting results from the studies they are currently conducting on trade barriers," he said.

Safari also revealed that they had formally requested the government of Tanzania to allocate Rwanda land within 10km of the port, where trucks from Rwandan transporters can park to ease congestion, to no avail. "Trucks delay at the port because of congestion and inefficiency of some customs officers," he argued.

While the law requires that custom officers work 24 hours a day, some customs work only half of the stipulated time, Safari added.

He also said fees charged on trucks were too high compared to what cargo transporters pay on the Mombasa-Kampala-Kigali route.

Tanzania charges about $600 per long truck from Dar es Salaam to Rusumo border, Rwanda charges $152 and $76 for semi-trucks, while Uganda charges $200 and $160 respectively, he added.

Tizeba revealed a decongestion plan that includes clearing a site at Isaka, where Rwanda shipments will be checked, verified and then be ferried by trains to the port.

"We have secured money from World Bank and European Union to develop two rail stations at Isaka. The project, once completed in 2015, will see all shipments from Rwanda ferried from Isaka to the port without necessarily having to be verified again at Dar es Salaam. This, we believe, will reduce delays and, hence, the cost of doing trade," Tizeba said.

The minister also noted that authorities were looking at ways of expanding to parts of Tabata and Sikuta, as well as improving cargo handling technology at the port. Tanzania is also in process of procuring over 900 new cargo wagons and 50 locomotives to improve efficiency at the port.

"We shall handle the issue of customs inefficiency with the Tanzanian Revenue Authority to ensure that they come up with a solution right away," Tizeba assured the local business community.

Tibeza warned drivers on engaging themselves in smuggling. "While drivers are complaining about double weighing of trucks, let us not forget that some of the vehicles are used to smuggle ivory and other valuables," he noted.

Hanington Namara, the Private Sector Federation chief executive officer, hailed Tanzania's efforts to ease trade along the central corridor. "This is good news for the private sector. We will now have a better alternative since Dar port is nearer compared to northern corridor's Mombasa port," he said.

But Tanzanian authorities have a lot of work to do to counter competition pressure from Mombasa that seems to enjoy support from top business and political circles.

Recently, President Kenyatta was joined by his Rwandan and Ugandan counterparts to commission a new $66.7 million berth at Mombasa. President Kagame spoke highly of Kenya's commitment to build infrastructure beneficial to the region.

During a recent interview, the chairman of Rwanda Freight Forwarders Association, Fred Seka made a case for Mombasa. "It now takes 2-3 days for a truck to arrive here from Nairobi. I encourage traders to use the Port of Mombasa because things have really improved," he said.

Kenya Ports Authority also recently opened an office in Kigali and it is expected that traders will soon start paying port fees from Kigali.

"We shall be able to pay port fees from here. This will eliminate the need to travel to Mombasa with money and pay physically or the cost of transferring money through the banking system." Seka said.

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