New Levies raise a storm at Mombasa Port

Proposed new levies and tariffs by state agencies operating at the Port of Mombasa, in government's ambitious plan arise revenue to finance its budget, have sparked outrage with traders warning they will yield dire economic consequences.

Kenya Plant Health Inspectorate Service (Kephis) plans to introduce inspection charges, Kenya Ports Authority (KPA) seeks raises its tariffs, and Mombasa County Government imposes parking fees for trucks.

Another contentious issue is the new directive on the Marine Cargo Insurance (MCI) that require importers to procure insurance from local firms, which industry players argue was introduced without proper consultation.

Under KEPHIS, shipping lines will pay an inspection fee of Sh2,000 for vessels exceeding 10,000 tonnes. It’s also pushing for a Sh1,000 inspection fee for smaller vessels and Sh375 per container.

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In a letter signed by Dr Noah Akala, Chief of Staff in the Mombasa County Governor's Office, the decision to suspend the levy followed a consultative meeting held on March 14.

He said the meeting agreed that the Mombasa County Government would formalise a Memorandum of Understanding (MoU) with KEPHIS to enhance the efficiency of container and vessel inspections.

Mr Elijah Mbaru, the designated Chief Executive Officer of the KSAA, KEPHIS, cannot justify its charges, as it is duplicating services already provided by other competent government partner agencies.

He said port health, immigration, port state control, International Ship and Port Facility Security Code officers, pollution officers, and customs inspect ships at no cost.

"KEPHIS lacks the capacity to perform the tasks it is charging fees for and has not provided a valid justification for doing so," said Mbaru.

Other stakeholders, like Ms Isabella Nyaga, a customs agent in Mombasa, described the new levies and the increase in tariffs as a desperate move by the government to meet its ambitious revenue targets.

“These charges will increase the cost of doing business, reduce the port’s competitive edge, and ultimately raise the cost of living, as all business costs must be reflected in the prices of goods,” she said.

KSAA says government agencies should not impose additional charges and that cargo with Certificates of Conformity (CoC) from the port of origin should not be subjected to further inspections.

“We were perplexed by the sudden introduction of these charges by KEPHIS, which not only deter business activity but also hinder seamless cargo operations at the Port of Mombasa,” Mbaru said in a letter to Kenya Maritime Authority (KMA) dated March 7.

The association further argued that the new levies would make the port less competitive, as costs would inevitably be passed on to exporters and importers.

This comes at a time that Dar es Salaam, Mombasa’s port's fiercest competitor, has completed the Dar es Salaam Maritime Gateway Project (DMGP), a transformative initiative aimed at modernising the Port of Dar es Salaam to enhance regional trade efficiency.

The initiative is set to boost port capacity from 16 to 28 million tonnes by 2027. Already, vessel waiting times have dropped from 80 to 30 hours, cutting delays and costs.

Another controversy bedevilling the industry is the proposed tariff review by the Kenya Ports Authority (KPA), which has further unsettled the business community and other stakeholders.

KPA proposed tariff adjustments would see an increase of at least 25 port services, including pilotage fees, mooring, anchorage, towing, stevedoring, storage, and penalties.

Notably, minimum vessel charges are set to rise from Sh19,387 to Sh25,850, while resident vessel fees will jump from Sh77,550 to Sh129,250. Storage fees for domestic cargo exceeding the free period (four days) will see charges increase to Sh3,900 for a 20-foot container and Sh7,800 for a 40-foot container.

These are proposals from a firm owned by former KPA executives that was awarded a Sh14.8 million contract to provide advisory services on the new pricing structure.

The firm argues that rising service provision costs, including fuel, labour, and equipment maintenance, justify the proposed hikes.

However, the umbrella body of importers and exporters using Mombasa, the Shippers Council of Eastern Africa (SCEA), has strongly opposed the adjustments, warning of significant cost implications.

SCEA Chief Executive Agayo Ogambi cautioned that container costs could rise by 20–27%, impacting trade competitiveness. He questioned the timing and necessity of the increases, arguing that KPA has already benefitted from currency fluctuations.

Ogambi also noted that while KPA has not reviewed its tariffs since 2012, the fact that port charges are denominated in USD has shielded the authority from currency fluctuations.

“In 2012, the exchange rate was Sh85 per dollar. Today, it's Sh129,” stated SCEA in its objection to the review of port charges upwards.

The KSAA argued that the proposed hikes are excessive and could drive shipping lines away from Mombasa, adding that KPA was benefiting from currency fluctuations.

“KPA’s expenditures are primarily in US dollars, while operations are conducted in Kenyan shillings. With the current exchange rate, KPA has already realised a 52 per cent revenue increase without adjusting service fees,” said Mbaru.

KSAA questions the justification for these tariff hikes, pointing out that there has been no significant improvement in productivity at the container or breakbulk terminals. Despite a workforce of 7,000 employees, vessels frequently experience labour shortages, leading to operational inefficiencies, Mbaru said.

Additionally, KPA seeks to increase the transshipment rate by 18.75%, contradicting KPA’s goal of attracting more transshipment cargo.

Mbaru also highlighted inefficiencies persisting despite investments in gantry cranes, citing a shortage of terminal tractors that impacts operations and rail transfers. Tug fees are set to rise by 90 per cent and dockage fees by 81 per cent, adding to the burden on shipping lines.

KSAA is urging KPA to reconsider the proposed hikes and instead focus on improving port efficiency, addressing labour shortages, and balancing investments in infrastructure. The association warns that failure to address these concerns could weaken Mombasa’s position as a regional maritime hub.

In another contentious move, the Insurance Regulatory Authority (IRA) and the Kenya Revenue Authority (KRA) have issued a directive requiring all imports to be insured locally starting February 14, 2025. While the Marine Cargo Insurance (MCI) requirement was meant to boost the local insurance sector, industry players argue that it was introduced without proper consultation and lacks critical support mechanisms for effective implementation.

The stakeholders fear the new requirement could disrupt existing global trade arrangements, particularly for goods insured under Cost Insurance Freight (CIF) agreements, where the supplier arranges insurance. Additionally, the stakeholders question how the IRA, the industry regulator, can conduct business without a conflict of interest, given its critical role in facilitating importers' insurance purchases through a special M-Pesa app. Ideally, KenTrade, which operates the country’s online cargo clearing single window system and has already developed an MCI module integrating all underwriters, should have been entrusted with the programme due to its extensive experience. They argue that this arrangement risks creating a monopoly in the Sh70 billion industry.

Meanwhile, the Mombasa was forced to shelve the plan to introduce a Sh700 parking fee at the port. The Road Hauliers Association (RHA), representing owners of over 1,500 trucks, had opposed the new levy and has vowed to go on strike.

At least 1,500 trucks collect cargo from the Port of Mombasa daily, which means the county wanted to collect Sh378 million from the levy each day, amounting to Sh4.536 billion annually.