Mombasa billionaire Mohamed Jaffer is shifting some of his cargo off-loading operations closer to Nairobi, putting even more jobs at risk in the coastal town.
Mr Jaffer’s Grain Bulk Handlers Ltd (GBHL) is seeking approvals to build a terminal whose main operations would cover 50 acres, an area equal to 18 football fields.
It is similar to the facility near the Mombasa Port, which handles grains, including maize and wheat, as well as clinker, coal and fertiliser.
Initial projections indicate that the terminal would cost Sh2 billion, indicating it as a project with massive cargo handling capacity in the labour-intensive operations.
Jaffer is arguably one of the biggest employers in Mombasa as a result of his cargo handling operations and more recently, the off-loading and packaging of cooking gas.
His African Oil and Gas Ltd is the sole importer of the product into the country, which it handles on behalf of all other marketers and the family-owned Pro Gas brand.
New facility
Jaffer’s new facility puts into even sharper focus the relocation of other businesses from the port city, thanks to the Standard Gauge Railway (SGR). Mass retrenchments in recent months have prompted weekly street protests.
Mombasa has been witnessing the scaling down of businesses, if not their outright closure.
Several Container Freight Stations (CFSs) including Autoport, Multiple ICD and Mombasa Inland are at various stages of relocation.
Transpares, one of the largest logistics operators in East Africa, has moved its head offices to Nairobi, heightening concerns about Mombasa’s continued survival.
Transpares’ new offices are along Mombasa Road – close to the Inland Container Depot (ICD) from where it is picking up cargo for onward transmission to its customers.
Other logistics providers have indicated their frustrations with the lack of business.
James Kitavi, the chief executive of the Mombasa chapter of the Kenya National Chamber of Commerce and Industry (KNCCI), said the city has been over-dependent on the port.
“We had kept all our eggs in one basket, which is the port. So if that is taken away, then everything else suffers.”
Mombasa Port, he explains, was the lifeline of the city, providing several business opportunities for cargo handling, clearing and forwarding and storage.
This then fed into other businesses, including eating joints, taxis and motels, providing livelihoods for millions of people down the chain.
The city’s current woes have been traced back to a Government directive requiring that all cargo traffic be transported to Nairobi through rail rather than road.
This has further exposed the coastal city economy’s soft underbelly, long impacted by terrorism, which has kept potential visitors away for several years.
Among the immediate implications of the slowing economy is that property values and rentals have taken a hit.
An investor who had given up on ever affording property at the Coast confided to The Standard that he had acquired a house in Old Town at Sh7 million, down from an earlier quote of Sh22 million.
Huge implications
Mombasa’s jobs situation is also being affected by the imminent collapse of Kaluworks, which is associated with billionaire industrialist Manu Chandaria. The firm is unable to pay off its debts, succumbing to pressure from cheap imports of cookware.
Milly Glass Works is also in the final phases of construction of its plant in Ethiopia, where it hopes to find refuge in cheap electricity.
Jaffer’s plans, therefore, bear huge implications for Mombasa. Confidants and business partners of the Jaffer family have confirmed the new plant, even though the reclusive managers of the media-shy mogul opted not to respond to our enquiries directly.
“It is a new terminal they are building in Athi River, but the family, as always, prefers to avoid publicity,” said a confidante who ordinarily speaks on the businessman’s interests.
The proposed location of the new non-food plant is around Athi River, which is home to six mega cement factories and about 20 kilometres from the ICD at Embakasi.
The Nairobi ICD has already been at the centre of the weekly street protests in Mombasa where it, jointly with the SGR, has been blamed for the massive job losses.
A recent study commissioned by the Mombasa County Government and the University of Nairobi indicated that 3,000 jobs have already been lost.
But for Jaffer, shifting some of his operations to the proposed facility, which would have as much capacity as the coastal one, is strategic given the recent policy changes around cargo handling.
It is envisioned that cargo, shipped in open vessels, including sugar, rice, wheat, fertiliser and clinker, will be loaded directly onto the train for onward transmission to Nairobi.
Containers are already being loaded directly from docked ships onto waiting wagons.
Details of the new GBHL terminal are contained in an application for approval by the National Environment Management Authority (Nema).
It “will comprise several components, among them a standard gauge railway siding, conveyors, diesel-powered generators, weighbridges, six flat sheds,” GBHL says in its application.
“At the proposed SGR siding, there will be a tipping pit for the sole purpose of collecting cargo that has been discharged from containers being carried on the wagons.”
A perimeter wall around the 50-acre parcel of land has already been erected, setting the stage for actual construction works to begin should the approvals be granted.
Ongoing negotiations
With the anticipated transfer of operations for GBHL almost guaranteed, it is the welfare of the thousands of workers who are employed directly or indirectly that is at stake.
Jaffer’s association with SGR has been a hot subject in regards to ongoing negotiations to grant the business deep discounts to haul its cargo.
Information publicly available, based on draft agreements, reveals that the Jeffers had agreed with Kenya Railways to pay about Sh25,000 for moving a single container to Nairobi on the new rail. Ordinarily, transporters pay up to Sh75,000 for the service.
Desperate for business for SGR, the Government may have submitted to the demands of the bulk cargo handler. Among the grounds for the concessions was that GBHL would guarantee cargo.
Land, where the proposed GBHL terminal is to be constructed, has already been secured through a lease entered with Kenya Railways on November 28 last year.
GBHL says the only conditions attached to the lease is to peacefully reside and conduct business within the premises without hindrance.
“With SGR having been built within the Port, the company plans to leverage the railway infrastructure to speed up deliveries to upcountry and the hinterland,” the firm says in its application for approval.
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