Kenya says high costs impede trade, foreign investment

Source: Xinhua| 2017-10-11 00:37:41|Editor: yan
Video PlayerClose

NAIROBI, Oct. 10 (Xinhua) -- High trade facilitation costs and poor logistics services are hampering foreign direct investment and growth in the east African region, a senior Kenyan official said on Tuesday.

Principal Secretary for Trade Chris Kiptoo said smooth logistics not only reduces the cost of imports but is vital to producers to be able to participate in global production circles and eventually move into new business.

"Improving logistics includes several dimensions such as enhancing logistics capabilities, the development of rehabilitation of physical infrastructure, and the streamlining of trade-related procedure," said Kiptoo during the launch of the 2017 logistics performance survey in Nairobi.

The report, released by the Shippers Council of East Africa (SCEA), said the climate of conducting business has improved in the region, thanks to right policy choices, the rise in intra-regional trade, and an enabled private sector.

The report, which analyzed the performance of trade logistics with respect to indicators of time, cost and complexity against those of the world's leading trade hubs, indicates that reforms initiated by the region's member states are finally paying off.

"We will use the indicators to interpret the performance of the logistics chain, reveal to both policy makers and businesses the full extent of bottlenecks, and propose appropriate redress measures," Gilbert Langat, the CEO of the Kenya Shipper's Council, said during the commissioning of the study.

Road freight costs have fallen "due to improvements made in road infrastructure, reduction in the number of police checks and enhancement of weighbridge efficiencies through automation," Langat said.

"However, challenges with capacity and inefficacy of the current railway means the mode of transport will continue to struggle to compete with road freight," he said. "The old railway challenges will be further compounded once the standard gauge railway is fully operational."

The report noted a 40 percent decrease in truck turnaround time between 2014 and 2016 -- between Mombasa and Nairobi, 26.4 hours; Mombasa to Kampala, 10.7 days; and Mombasa to Kigali, 12.5 days.

Langat said the improvement in port dwell time, from about 68 hours in January 2015 to eight hours in December of 2016 at the port of Mombasa can be attributed to the introduction of fixed berthing and expansion of the harbor.

Out of the six East African Community (EAC) member states, only Tanzania and Kenya have direct access to the sea, through Dar es Salaam and Mombasa respectively. Rurundi, Rwanda, South Sudan, and Uganda are all landlocked.