Kenya elections: Ugandan businesses worry about trade disruption, look to Dar es Salaam

By Musinguzi Blanshe
Posted on Monday, 18 July 2022 19:26

The main port in Tanzania's capital Dar es Salaam is seen in this aerial view taken 4 December 2009. REUTERS/Katrina Manson

As Kenya's 9 August national elections draw closer, anxiety is growing in Uganda’s business community over any likely chaos that could disrupt flow of goods at Mombasa port. It handles more than 85% of the country’s imports and exports. Traders tell The Africa Report that they may turn to Dar es Salaam port, which the Tanzanian government has been pushing as a viable and cheaper alternative.

President Uhuru Kenyatta is set to finish his second term and hand over to a new leader. The presidential election pits veteran opposition leader Raila Odinga – who has Kenyatta’s backing – against William Ruto, the deputy president.

Recent elections have brought violence and been contested in the courts. Odinga is piling pressure on the electoral commission with various demands that he argues are prerequisites for a free and fair election. But Ruto’s team seems to back what the electoral commission is already doing.

The International Crisis Group, a think tank that focuses on conflict, has warned that “Kenya remains highly vulnerable to episodes of pre- and post-election violence.” The organisation says violence could be triggered by “ethnically driven and personalist politics that has been a feature of electoral competition in the country for decades.”

Crisis Group further argued that “the election is likely to swing in favour of one candidate or the other at the last minute,” prompting the losing side to claim rigging. Opinion polls continue to show a tight race between Odinga and Ruto.

What does it mean for landlocked Uganda?

Whichever way the election goes, Uganda has not been viewed as a neutral neighbour because of Ruto’s perceived closeness to Uganda’s President Yoweri Museveni. Last year, the Kenyan authorities blocked Ruto from visiting Uganda on Museveni’s invitation to partake in the launch of the construction of a vaccine manufacturing facility. At the time, Odinga allies accused Ruto of trying to pick up lessons from Uganda’s ‘lifetime presidency’ ruling party, which they say are not “worth borrowing”.

And accusations, albeit, with no evidence, continue to flow. The latest is that pre-ticked ballot papers in favour of Ruto will be entering Kenya through Uganda.

Why the anxiety?

Despite the fact that there was no widespread violence in the 2012 election when Kenyatta succeeded Mwai Kibaki and then again in 2017 when he won a second term following the annulment of the first round by the supreme court, Ugandan traders’ current anxiety is informed by the 2007 election. The 2007 post-election violence left traders in the region who depended on Mombasa port, with losses worth about $63m. Court orders and diplomatic engagements between the two countries did not prompt the Kenyan government to pay compensation.

“We are advising traders to be careful as we watch the situation,” Musoke Thaddeus Nagenda, chairman of the Kampala City Traders Association, tells The Africa Report. The group is among many from Uganda and Rwanda that sued the Kenya government and won compensation.

Nagenda says they are engaging with government officials, who seem to not take traders’ concerns seriously. “They seem not to have serious concerns, but it’s our mandate to protect our traders. You know we have to wake them [government] up. As you know, the private sector tends to be faster than the public sector,” he says.

Though the government has in principle assured the business community that everything will be fine, Stephen Asiimwe, the chief executive officer of the Private Sector Foundation of Uganda, tells The Africa Report that the businesses “need foolproof protection”.

Dar es Salaam port as an option

In May, Tanzania’s President Samia Suluhu Hassan – accompanied by the transport minister, Tanzania Ports Authority, Tanzania Railway Corporation and other officials – visited Uganda and held meetings with the business community. One key item they focused on was wooing the business community to shift from Mombasa to Dar es Salaam port.

The Tanzanian officials were telling Ugandans about the ongoing projects on expansion of Dar es Salaam port and renovation of the railway that will connect to Mwanza, which is on the Tanzanian side of Lake Victoria . Goods would thereafter be shipped to Uganda via Lake Victoria.

Uganda’s President Museveni says he is impressed by the project. Tanzania’s pitch is to deliver a container in three days; it takes between a week and a fortnight for a container to move from Mombasa to Kampala via road.

Tanzania is also promising to deliver containers at a lower cost. Currently, the average transport cost to transport a 20-foot container from Mombasa to Kampala is $4,000 and from Dar es Salaam to Kampala is about $5,000.

Consideration time

Ugandan business leaders are taking Tanzania’s pitch seriously. All leaders of business organisations interviewed by The Africa Report said they are telling traders to consider Dar es Salaam port.

“Given the fact that Tanzania has invested heavily in the Standard Gauge Railway, we are advising the traders to use this alternative because it’s going to be cheaper and a bit faster,” Kampala City Traders Association’s Nagenda says.

The Private Sector Foundation of Uganda’s Asiimwe says everybody should be concerned because the ripple effects of a problematic election can take months to be solved. Beyond an election, he adds, it is risky for a country to be dependent on Mombasa. “You can imagine 85% of your economy is managed by that little square of a port,” he says.

“The more reason we need to have a good alternative route in the unlikely event of any problem in Kenya, not just elections. Anything that happens in Kenya on that port,” he adds.

The shift challenge

But Asiimwe admits that shifting to Dar es Salaam immediately is challenging. “If a cargo ship is leaving Guangzhou and is destined for Mombasa, to change from Mombasa to Dar es Salam, it’s a bit of a nightmare,” he says.

In the 1970s, about 40% of Uganda imports and exports went through Dar es Salaam port. That import-export business shifted to Mombasa as a result of the feud between leaders Idi Amin and Julius Nyerere. Tanzania backed the rebels who ousted Amin in 1979.

Currently, less than 1% of Uganda’s exports go through Tanzania, according to the Tanzania Port Authority. But the Tanzanian government is determined to take a bigger share of Uganda’s 10m tonnes of goods that go through Mombasa. The Tanzania Port Authority is finalising plans to open an office in Kampala.

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