January 31, 2017
WHY KENYA IS EAST AFRICA’S GATEWAY:A LOGISTICS PERSPECTIVE
Kenya’s strategic location has greatly contributed to its position as a major gateway into the East Africa region. This has led to Kenya’s popularity as a regional business hub for trade, finance, communication and logistics. Kenya today is a major route to access markets in; Uganda, Rwanda, Burundi, Democratic Republic of Kenya, Ethiopia, Eritrea, Somalia and Djibouti
Kenya’s economic development blue print ‘Vision 2030’ has further espoused the ambition to achieve middle income status with a sustained economic growth of 10% per annum. As such, a number of government initiatives have been put in place as vehicles to deliver this ambition. Kenya’s emergence as East Africa’s main gateway has been boosted by the investments made by players in both the public and private sector. The main international airport, Jomo Kenyatta International Airport (JKIA) is the largest and busiest airport within the East Africa region. Today JKIA attracts a high number of local, regional and international airlines in both the cargo and passenger terminals whose regional status has been boosted with numerous awards for being Africa’s leading airport. Some of the airlines frequenting JKIA have facilitated easy connections from Nairobi and onwards to neighboring countries within the East Africa region. Jared Oswago, the Divisional Manager at Siginon Aviation states, “Kenya is one of the few countries that are able to handle and export cargo on the same. Cargo comes to Kenya by air, cleared through customs and transported onwards by road or sea to another country. This is particularly true in the humanitarian sector in handling some of the relief and related cargo”
JKIAs cargo handling capacity continues to grow and has been boosted by investments made by 4 air cargo terminal operators offering huge, modern cargo handling and storage facilities that are fitted with specialized cargo handling equipment. Siginon Aviation is one of the 4 air cargo terminals located at Nairobi’s JKIA. The terminal which was recently launched is equipped to handle general cargo, motor vehicle, dangerous goods, project and perishable cargo. Jared adds, “JKIA’s dwarfs other airports in the neighboring East African countries. Today JKIA can comfortably handle a number of aircrafts at any one time. In addition, Nairobi’s unique position allows for easy cargo delivery once it comes to Kenya through air and connected to the rest of East Africa using either the expansive road network in Kenya or through further local and regional air connections from JKIA”.
Cargo is primarily routed into and out of East Africa through the Kenya via the port of Mombasa or JKIA. In terms of imports, the cargo is mainly petroleum, dry cargo, chemicals, fertilizer and agricultural inputs and motor vehicles. The export cargo largely comprises agricultural produce, flowers and fish. The alternative sea ports serving the East Africa market are in Tanzania with the Port of Dar es Salaam and Mtwara or the Djibouti Port. For Air Freight, alternative cargo routes are through the Dar es salaam or Entebbe airport. However, some of these routes are not as popular as they are considered too long, fraught with corruption or facing high levels of insecurity. Jared adds, “The Kenya market has easy connections to most European and middle East destinations which are the primary sources or consumers of the cargo that is imported or exported.”
The Kenya government has cemented Kenya’s advantageous position through by embarking on various infrastructural developments such as the JKIA airport expansion project which include addition of new aircraft aprons and taxi ways, the planned 2nd runway project, adoption of the single window cargo clearing system that allows online cargo clearance and boosting the Kenya road network particularly on key routes that connect to neighboring countries such as the Northern Corridor which connects to Uganda as well as those serving Tanzania. The Standard Gauge Railway (SGR) project which is currently underway provides an additional connection to Kenya and the wider East Africa region and shortens cargo freight times.
The Kenya market has enhanced its reputation due to its advanced financial sectors particularly in banking. These allow for ease in trade in local and foreign currencies in a stable and mature banking environment. The Kenyan labour force is considered one of the most vibrant and highly skilled in the region. This has greatly contributed to the growth and productivity in the logistics industry and others that require skilled labour input .
However, Kenya’s gateway advantage faces stiff competition from the neighboring countries keen for a slice of the lucrative East African economic pie. The enticement of the gateway position has seen neighboring countries commence on various infrastructural projects that should also enhance their logistics capabilities. As such, Kenya should not rest on its laurels but instead consistently improve on its service delivery such as maintain and improve the road network, accommodate banking policies that nurture growth and boost trade. In addition, there is an opportunity for Kenya to source for new markets in the Americas, Western Europe, Russia and avoid over reliance on the traditional markets in the UK and Europe. National security, remains a backbone of a vibrant logistics industry as such great lengths should be taken to ensure that Kenya’s current and new trade partners feel that Kenya is a sound and secure environment for trade. This would no doubt contribute towards fast tracking the direct US flights to Kenya and boost the Kenya’s economy as well as give the global market place confidence that Kenya is ready to do business. The Northern part of Kenya is teeming with opportunities particularly with the discovery of oil coupled with the adjacent development of Lamu Port and equip areas where mining of natural resources with sufficient infrastructure to facilitate trade.