This archive report was first published on 14 July 2019.
On July 1, 2019, President Uhuru Kenyatta made a significant announcement that has left many in Kenya wondering about the country's future in the transit business. He promised visiting South Sudan counterpart Salva Kiir 10 acres of land for the construction of a dry port, just three months after making a similar offer to Uganda's Yoweri Museveni.
A dry port is a customs area connected directly to a seaport by rail and road, and the Ugandan and South Sudan dry ports will rely mainly on the standard gauge railway for connectivity.
While shippers believe the decision will help secure Kenya's transit business, analysts insist the agreement should be carefully crafted to ensure Kenya benefits from the deal.
"If Kenya is only providing land while Uganda and South Sudan invest in the operations of the dry ports, then this is a deal heavily skewed against the country," said Mr Tony Watima, an economist.
Kenya, which has seen the share of its Rwanda and Burundi-bound cargo drop over the years, is under pressure to safeguard its transit business. Uganda and South Sudan account for 95 per cent of Mombasa port's transit business, with the Democratic Republic of Congo also emerging as an important destination for cargo shipped via the northern corridor.
"Offering land to the two countries, which have been complaining of high logistics cost, is a sure way of getting them to commit resources on the Kenyan transit route," said Shippers Council of Eastern Africa chief executive Gilbert Langat.
