Mombasa could lose trade to Dar on proposed Busia fee – truckers

Kenya stands to lose to Tanzania on transit business to neighbouring landlocked countries if the plan to increase truck entry fees by Busia County is upheld, transporters have warned.

The Busia County Finance Act 2023 (Schedule 5, Part D) requires all transit trucks and trailers entering the county to pay entry fees effective August 1, 2024. This includes trucks crossing the borders of Busia and Malaba.

Under the new plan which seeks to levy all road motorised transport , the county is seeking Sh1,000 per entry per truck for foreign vehicles and Sh400 per truck per entry into the county for Kenyan trucks.

This is in addition to a Sh500 parking fee for trucks and trailers.

The Kenya Transporters Association Limited (KTA) now says the move to impose entry fees for all trucks transiting the county, on national government roads, is wrong and will have major implication to businesses.

According to KTA, the charges will add to the cost of doing business along the Northern Corridor which has in recent years faced increased competition from the Central Corridor, amid several levies being imposed by different counties.

The 1,700 kilometre-long Northern Corridor runs between Mombasa (Kenya), Uganda Rwanda, Burundi and Eastern DRC.

The 1,300 kilometre-long Central Corridor serves Tanzania, Rwanda, Burundi, Uganda and Eastern D.R. Congo, with an exit and entry point at the port of Dar-es-Salaam.

The two corridors facilitate export and import activities within the EAC region with a combination of rail, road and lake transportation networks.

KTA yesterday opposed the move saying it is also in violation of Article 209 of the Constitution.

“KTA contends that Busia County's truck entry fees contravene Article 209 of the Kenyan Constitution. This article empowers county governments to levy charges on services rendered, stipulating a clear and direct link between the service and the charge to prevent arbitrary taxation,” chairman Newton Wang’oo said.

It is also an “unfair burden” for trucks that traverse multiple counties to deliver essential goods and services, both imports and exports, he said.

“Imposing entry fees in every county is unfeasible and would drastically increase transportation costs, ultimately affecting the prices of essential commodities,” Wang’oo said, “ For example, there are a total of 15 counties between Busia  and Malaba borders and Mombasa port.”

KTA further noted that national roads are maintained by the national government through KeNHA hence county governments lack the authority to restrict movement on these roads.

The biggest concern however remains on the cost of doing business and losing to Tanzania on transit business.

“The Busia County trucks entry fee will escalate import and export costs, rendering the Northern Corridor less viable. Consequently, traders may opt for the Central Corridor through Tanzania,” KTA said.

The Port of Mombasa has in recent years lost at least 10 per cent of transit cargo volumes to Dar es Salaam, according to the Shippers Council of Eastern Africa, mainly on cost implications.

For instance, Dar es Salaam allows traders up to 30 days of free storage compared to Kenya’s 15 days, before penalties are imposed.

Kenya was last year forced to increase the period from nine days to remain competitive.

It is also riding on efficiency which has seen it remain the preferred route by traders in the region and global markets.

Kenya’s biggest market is Uganda which accounts for up to 83 per cent of transit volumes going through the port of Mombasa.

While Rwanda and DR Congo majorly use Dar es Salaam, the little volumes going through Mombasa have also been going down, industry data shows.

Freight costs between Mombasa-Kampala-Kigali and Juba range between $2,000 (Sh257,760) and $4,500 (Sh 579,960) compared to the average $2,700  (Sh347,976 ) and $4,400 (Sh567,072 )between Dar are major hinterland destinations.