Fix illegal taxes, suspend relocation of cargo via Nairobi – MPs
Members of Parliament (MPs) have swung into action to shield traders and consumers from excess taxation and effect of relocation of cargo goods via Nairobi that has been triggering high market prices.
The lawmakers, through the Finance and Economic Planning Committee in the Reconstituted Transitional National Legislative Assembly (RTNLA), suspended the illegal collection of taxes both within Kenya and South Sudan borders and forced transfer of South Sudan cargo to Nairobi private Freight Container Terminal despite the Government directives from ministry of trade and Industry who oversees imports and exports of goods and commodities.
The committee summoned the Minister of Finance and Economic Planning on Tuesday to explain the continuous rise in the market prices and deliberate on a solution to the problem.
RTNLA have suspended relocation of cargo good via Nairobi and have returned all South Sudan Cargo goods to be handled in Mombasa. In addition they have formed Government High Level Delegation team to investigate why cargo movement changes in Kenya were made by the South Sudan Minister of Transportation and the reasons South Sudan-bound goods were destined for a Nairobi dry port for clearance at the expense of traders who were complaining of excess costs of logistics.
The Chairperson of the TNLA Committee on Finance and Economic Planning, Changkuoth Bichiock Reth, said some collections are being carried out in Mombasa and Nimule out of the Financial Act.
“Any collections that are not in the Act should not be collected. We, therefore, direct the Minister of Finance and Economic Planning to cancel all those collections that are not in the bill with immediate effect that they should not be collected because we also believe that they are also part of the increase of prices of goods in the market,” Reth said.
Emmanuel Kachoul, Chairman of South Sudan Business Community in Mombasa, said that the South Sudan Foreight Forwarder Assocation or Business Community which is an officially recognosed body representing the private sector in Mombasa, entire northern corridor and well conversant with port operation, were not consulted to offer free advisory.
Hon. Kuol Athian, the Minister of Trade and Industry, said that the other important stakeholders including the Ministry of Trade and Industry who oversee import, export and services were overlooked. The decision to transfer South Sudan cargo by standard Gauge Railway was made by the Minister of Transport and Commissioner of Custom Division.
Hon. Kuol Athian added that South Sudan is in process of acquiring the land Title Deed of 10 acres designed by President Urhuru Kenyatta.
‘‘Our Embassy in Nairobi and in collaboration with South Sudan Government are following the transfer of the Navisha Land Title now in Nairobi.’’
Kachoul added that EAC land countries of Uganda, Rwanda, Burundi and Dr. Congo have refused to use the SGR and opted to establish their Naivasha Container Depot and then transfer their cargo directly which will be more cheaper then Nairobi
“We believe that these issues will be resolved so that at least these prices go down,” he said.
Minister of Trade and Transport was among the Ministries summoned on Tuesday. The MPs discussed the relocation of South Sudanese cargos to Nairobi without the knowledge of the parliament, which they said was contributing to the rise in market prices.
Reth said the traders are paying about $250 per cargo in Mombasa and do not know who is collecting the money.
“And in Nimule, SSP 75,000 is being collected, and an additional $500 is being collected that is not in the financial law.”
“We have also direct the Minister of transport to suspend the relocations of the cargo and the cargos should be cleared from Mombasa.” In the meantime, we have sent a parliamentarian committee that will go and investigate the issue and come up with the recommendation so that we have the final arrangement of what is to be done. “
The Minister of Finance and Planning, Agak Achuil Lual, said the high prices of goods are caused by double taxation.
“A necessary collection of taxes is one of the reasons for the high prices of goods in the market.”
Agak stated that another option for reducing market price increases is to subsidise them by giving money to 15 or 20 traders who would then sell the goods at a lower price.
However, South Sudan’s National Chamber of Commerce, Industry, and Agriculture on July 4 wrote a letter to the Ministry of Trade and Industry, the Ministry of Transport, the East African Business Council, National Security, Economic Division and other concerned bodies saying that they were not consulted and that they called the decision “forceful and unethical” because it gives individuals exclusive business while excluding other players in transportation, clearing, and forwarding.
According to the letter written by the Chamber Acting Chairperson of the SSNCCIA, decision made is a violation of the World Trade Organisation WTO principles and trade Liberalisation in the country.
The SSNCCIA, wants traders to be able to clear their cargo in Mombasa without interference from third parties, and it wants the allocation of container freight stations to be free.
The letter stated that all the current logistical confusion has caused delays.
“All of the delays have raised the cost of doing business in South Sudan and have had a negative impact on our citizens and the economy,” the statement said.
On June 27, 2022, South Sudan Freight Forwarders Association led by Abraham Majak protested bitterly on a letter how South Sudan Customs Division and the National Revenue Authority transferred South Sudan’s cargo to Nairobi Freight Terminal (NFT) without consultation with port stakeholders, traders and the government of South Sudan.
The Association said that as a result, the decision was sanctioned without knowing the financial and logistical implications from the requirements of Kenya Revenue Authority and Kenya Ports Authority. They distanced themselves from Ms Adau Kuol, claiming she does not act on behalf of the South Sudan Business Community.
A July 11, 2022, study by the South Sudan Freight Forwarders Association revealed a massive disparity in the cost of moving cargo straight from Mombasa to Juba as opposed to making a stop over in Nairobi.
For instance, when moving a 20-foot long container from Mombasa to Nairobi by Standard Guage Railway, then to Juba by road, a trader would incur $6,000 in transportation costs. But when moving the same cargo continuously on the road from Mombasa to Juba, the charges drop to $5,200.
A 40 feet container of cargo costs $6,300 when making stop over in Nairobi when movement on road to Juba would cost $5,500.