Kenya's Mombasa to start charging extra taxes at port - governor - CNBC Africa

Kenya's Mombasa to start charging extra taxes at port - governor

East Africa

by Reuters 0

Governor of Mombasa to start charging extra taxes at port. PHOTOS: portstrategy

Mombasa’s governor said on Thursday, defying opposition from the national government in Nairobi. 

(WATCH VIDEOProposed levies for cargo at Mombasa port unjustifiable)

Governor Ali Hassan Joho told Reuters the extra revenue levied by the local authority would be used to repair pot-holed roads and crumbling infrastructure in the ancient Indian Ocean hub.

"There is absolutely no way that you are going to have a world-class port city in a rotten city. Those interests have to move in tandem," Joho said in his office in Mombasa, which funnels trade to and from landlocked South Sudan, Uganda and Rwanda.

The central government in Nairobi had opposed the new levies proposed by the local authorities, warning that they could undermine recent reforms to speed up the processing of goods through the port. 

Officials in Nairobi also worry the tax could hand an advantage to rivals such as neighbouring Tanzania, which is building a 10 billion US dollars mega port in Bagamoyo to go alongside its facility in Dar es Salaam. 

The port levies could yet become the biggest test of Nairobi's ability to challenge decisions by local governments which can charge new taxes using powers granted to Kenya's regions under a 2010 constitution.

Kenya Ports Authority (KPA), the port operator, also opposed the levies which would see shipping firms pay 20 US dollars per tonne of exports and 20 US dollars per tonne to clear imports.

Each ship would also pay 60 US dollars for inspection, 60 US dollars per square metre for compulsory spraying against disease and 40 US dollars per container for verification.

KPA chairman Danson Mungatana told Reuters that the port would not be able to collect the levies proposed by the county government as it would be illegal for it to do so.

"I am also waiting to see how they will do this," Mungatana said. "The port, by constitution is a national asset, and therefore any legislation by a county or any other body, that contravenes this constitutional provision is null and void."

(READ MORE: Kenyans protesting over jobs block highway from Mombasa port)

Businesses and residents in Mombasa often point to high unemployment, rubbish-strewn streets and mouldering government offices as proof that Nairobi has neglected Mombasa despite the vast importance of the port to east Africa's biggest economy.

Joho said Kenya would not lose trade to Tanzania after the new taxes. "Efficiency is what attracts business," he said. "How do you direct a container to go to Dar es Salaam or Bagamoyo because of 40 dollars, the argument just doesn't work."