Private clearing and forwarding firms have protested against the plan to deny them government cargo handling services, saying the move goes counter to President William Ruto’s agenda to empower small and medium-sized enterprises.
The state seeks to transfer the handling and clearing of its cargo to the Government Clearing Agency (GCA), which would deny a huge chunk — nearly half — of business to private firms.
Private agencies say the bid to revive GCA will lead to over 10,000 job losses and more companies will shut down despite President Ruto’s promise to protect small firms.
Through their association, the Kenya International Freight and Warehousing Association (Kifwa), the operators said more than half of cargo handled in different points — either by sea, air or road — are government-owned.
The government estimates it spends Sh3 billion annually on private shippers and clearing and forwarding agents.
Kifwa chairman Roy Mwanthi said the move will not only slow the country’s development but will also render Kenyans jobless.
“The move will see about 10,000 Kenyans lose jobs considering more than 50 per cent of cargo handled in different points such as the port of Mombasa, Jomo Kenyatta International Airport and different border points is government-owned,” said Mr Mwanthi.
He added: “Already about seven companies which have long-term contracts with the government to handle its cargo and with loans to fund their businesses have expressed their fears over the move to transfer services to GCA.”
The private firms added that the government has no capacity to handle such cargo.
“What they are calling GCA has only an office. What we want to know is how it will be able to clear and transport such consignments to rural areas considering the government has no vehicles to ferry such cargo; it only has an office for administration purposes,” said Mr Mwanthi.
This week, the government announced that it has initiated a process to bar private clearing and forwarding agencies from handling all state imports and exports as it also seeks law change to revive the Kenya National Shipping Line (KNSL).
The government is committed to turning around the moribund GCA and KNSL into profit-making institutions to save more than Sh3 billion spent annually on private shippers and clearing and forwarding agents.
Shipping and Maritime Affairs Principal Secretary Shadrack Mwadime said the GCA is capable of generating revenue worth Sh500 million or more annually through clearing and forwarding services.
While touring the agency’s offices at Shimanzi, Mombasa, this week, the PS said the move will result in significant savings to the government in form of demurrage charges and penalties which the government currently pays to private firms for its imported goods.
Mr Mwadime said it will also ensure safety and confidentiality in the clearing of sensitive government cargo. “The priority of the government is to revitalise institutions that have the capacity to contribute to the country’s economy and thus uplift the lives of Kenyans,” said Mr Mwadime.
In a Bill sponsored by Majority Leader Kimani Ichung'wah, the Ruto administration has approached MPs to amend the Merchant Shipping Act by deleting the prohibitive Section 16 of the law, a move that would give KNSL a lifeline.
The Transport committee is expected to review the proposal once Parliament resumes this month.