The reversal of a decision on compulsory cargo transportation from Mombasa to the hinterland by standard gauge railway (SGR) makes economic sense.
It’s bad business practice to create a monopoly — not at this time of liberalised market and democratised social and political landscape.
It was unwise to decree that all cargo from the Mombasa be ferried upcountry through SGR.
To the proponents, the reasoning was that since the government had spent heavily on putting up the new rail network, and given the urgency to recoup the funds and repay the exorbitant loans, the viable option was to force importers to use the railway to ferry their goods.
But that is obsolete thinking. Swiftly, that directive precipitated major losses to long-distance road transporters, who were pushed out of business as SGR got preferential treatment.
Concomitantly, that triggered mass protests at the Coast with the transporters vowing to fight for their fair right of business at the port.
The port is the lifeline of Mombasa. Besides being a big employer, it sustains a major base of logistics companies, which contribute to the region’s economy, a fact that cannot be swept under the carpet.
When, therefore, the local entrepreneurs took to the streets to demand withdrawal of the directive, this was easily boiling down to an economic protest threatening even the security of the region.
Indeed, matters were made worse by the spin that the order was subtly designed to cripple Coast’s economy.
As a model, ferrying cargo via SGR and terminating at Syokimau in Nairobi is a major economic and logistical nightmare.
It amounts to double transaction — paying for hauling goods to Nairobi using the rail and further for connection to onward destination through the road.
Time and resources are lost, demurrage costs rise and safety of goods cannot be guaranteed. Delays and other inconveniences become the norm. All these undermine business.
On its own, SGR is a tale of over-promise and poor delivery. Conceived as part of an integrated transport system to accelerate free movements of people and goods, SGR has unfortunately been making huge losses and with the latest projections, it is not coming out of the woods in the foreseeable future.
Which is the disappointing fact; that because it cannot make ends meet, importers are compelled to use it.
Mombasa port is strategic for the region, serving several countries in East and Central Africa.
But its continued comparative advantage can only be guaranteed if its operations are liberalised and investors assured that they have an even playing field.
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