Kenya’s foremost public litigation czar, Okiya Omatata, has delved into one of the most fiercely fought conflicts in the transport and logistics sector.
I refer to the perennial contests by wealthy and politically influential Mombasa businessmen for ownership of concession licenses, which grant private parties the right to run and operate port terminals and infrastructure such as container freight, dry ports and storage facilities along the Northern Corridor.
The latest episode in this zero sum struggle that pit rich Mombasa family businesses against one another in constant do-or-die battles for access to gate-keeping rents at the Mombasa port, is the case where Mr Omtata has sued the board of the Kenya Ports Authority (KPA) over its recent decision to issue a licence for a second grain bulk grain handling terminal to a company associated with the family of Mombasa Governor Hassan Ali Joho.
Seven wealthy owners of dry ports and container freight stations, including the Dockworkers Union are listed in the court case as interested parties in a case that has all the ingredients of a cause célèbre.
I cannot discuss the merits and demerits of the matter because the sub judice rule does not allow comment on substance and merits on issues that are pending before courts. I will restrict myself to broad strokes and trends, and to raising the public policy questions which this interesting conflict brings to the fore.
Structural transformation
Each time a new episode in these fights bursts out, my mind goes back to a book I read many years ago while at the university by the American historian, Prof Fredrick Cooper, who described the African state as the ‘gate keeper state’ . This is where elites concentrate on making money from guarding the gate – by collecting most of the taxes from imports and exports, controlling exit and entry visas and from fees from issuing licenses – rather than engage in production and in activity with potential for catalysing structural transformation of the economies of their country.
Mombasa elites are at each other’s necks trying to kill one another in a battle of attrition over the guarding of the gate.
And, writing about the contest for the control of the gate in Mombasa in a 2017 paper that was published in the Journal of Modern African Studies aptly titled, ‘profitable inefficiency: the politics of port infrastructure in Mombasa’ the British economist and researcher, Hugh Lamarque, made a poignant point when he argued private the business of owning dry ports, and freight stations has thrived and mushroomed in Mombasa because of KPA’s own inefficiencies.
Clearly, the reason Mombasa elites are almost killing each other over opportunities to guard the gate is because we don’t follow clear and transparent guidelines when issuing licenses for private terminals and dry ports.
These licences are doled out to individuals depending on their political connections. If I were the one making decisions for the government, I would rule that all concessions of private port terminals be handled and governed under the new framework of the recently passed Public Private Partnership Act of 2021.
I don’t have to go in the substance of the new public private partnership regime here. The point here is that licences for concessions should be issued more transparently and by institutions that not only possess the clout and stature to resist political interference but are also capable of aligning the short interests of private businesses with the country’s long term plans and vision.
I am not against privatisation or of increasing the flow of more private investment in the business of port terminals.
Corrupt dealings
My point is that the phasing of private investment entry in this space should be guided by a broad over-arching vision grounded on the country’s long term plan.
If we don’t plan and guide this sector well- the fierce fights for the control of the gate may end up causing cannibalisation instead of competition.
A port is a very critical piece of infrastructure and national asset to a country. Here in Kenya, 30 per cent of national government revenues come from customs duties. But even more critical, ports are the means by which contraband, ranging from drugs to ivory, escape to the rest of the world.
When licensing concessions, the level of transparency must be high because-all over Africa, port concessions have been plagued by rumours of corrupt dealings and allegations of high-level rent-seeking.
Three years ago, Djibouti filed an arbitration case in London against the international port operator there, alleging that the port operator had paid bribes to top government officials to win the contract.
In Senegal, the Justice ministry investigated a former minister and son of the ex-president, on corruption related to concession of port terminals at the port of Dakar. In Guatemala, a CEO of an international port authority was only recently accused of giving a US$246 million bribe to a former president of the country to win a 25-year concession of a port terminal.
Let’s grant licenses for port terminals transparently. BY DAILY NATION
