Tuesday, August 12, 2008

Kenya Ports Work Slowdown: Government Meddling Hampers Free Trade

The election violence in Kenya earlier this year garnered a great deal of media attention for its suddeness as well as its shocking violence captured on video and splashed across television screens around the world. Wasn’t Kenya that romantic place of safari holidays and beach resorts?

The Kenyan election problems were simply one more manifestation of an endemic disease – that of gross governmental mismanagement. This disease is currently manifesting itself at the port of Mombasa, albeit in a way that does not make for splashy headlines or graphic film clips.

The Kenyan Ports Authority, a government controlled agency which manages the port of Mombasa, is in a labor dispute with the Mombasa port workers. These port workers are the ones who dock the ships, load and unload the cargo and ensure the smooth functioning of international trade and commerce. The majority of East Africa’s goods transit through the port of Mombasa. Rwanda, Uganda and Kenya export coffee, tea, and other agricultural commodities, and import petrol and other goods they do not manufacture themselves. Sudan and Somalia are heavily dependent on World Food Program aid shipments that transit through Mombasa.

In July the KPA mandated a seven day work week for the dock workers - without commissurate pay increases. The dock workers have responded with a dramatic work slowdown resulting in containers piled up and ships delayed – costing hundreds of thousands if not millions of dollars per day.

What does this really mean? This means higher costs for anyone who consumes goods that transit through the port of Mombasa – ie: everyone in East Africa from Sudan, Somalia, Uganda, Rwanda and Congo. Those lower on the economic ladder will be hit hardest.

The actions by the KPA are one more example of Kenyan fiscal mismanagement. Over the past thirty years Kenya has been the recepient of over $15 billion in aid through international institutions – namely the World Bank. The conditions on that aid was that the Kenyan government would have to reform its economic policies and liberalise its economy. Key to this was the privatisation of many state-owned entities. Again and again, Kenya did not fulfill its end of the bargain. Instead of cutting off aid, the World Bank accepted the excuses and ploughed more aid into the country, enriching its rulers and fostering endemic corruption.

As if the economic losses from the election violence were not enough for the Kenyan government, now they are mismanaging their main economic lifeline – the port of Mombasa. If Kenya wishes to pull itself out of poverty as opposed to being supported by the welfare of the World Bank and aid agencies it must reform its economic and fiscal policies.

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