Business

Why local transporters push for 60pc stake in logistics sector

Tuesday, April 2nd, 2024 06:17 | By
Transport trucks. PHOTO/Print

Kenya Transport Association (KTA) is pushing for a significant policy shift that would guarantee local entrepreneurs a majority share in the transportation and logistics sector.


This proposal, advocating for a 60 per cent mandatory local stake, is a strategic effort to counterbalance the dominance of multinational corporations and address the vulnerabilities of local drivers within the current legal framework.


According to Statistica, a global provider of market and consumer data, the market value of Kenya’s transport and logistics sector is expected to reach $7.62 billion (Sh1 trillion). The KTA’s proposition presented to the National Assembly’s Committee on Trade, Industry and Cooperatives by the chairman Newton Wang’oo, underscored a critical imbalance in the industry, where local ownership of transport vehicles stands at a substantial 90 per cent, yet 70 per cent of logistics contracts are clinched by international firms.


“This discrepancy not only stifles the competitive edge of local companies but also raises questions about the equitable distribution of economic benefits within the sector,” he said. The association boasts 300 members owning 15,000 trucks.


Central to the KTA’s advocacy is the implementation of a quota system, a measure they believe is within Kenya’s capacity to enforce.


Wang’oo said that ongoing negotiations with the East African Breweries Ltd (EABL) to earmark the distribution of the popular low-cost brewer Keg for local transporters is a testament to the association’s commitment to this cause.


Market share


“We advocate for a quota system and Kenya has the capacity to ensure that this is achieved. We have talked to one of the players, EABL for supply of low-cost Keg beer to be exclusively reserved to local transporters,” he stated.


The KTA’s concerns extend beyond mere market share. They highlighted the broader implications of anti-competitive practices prevalent in the shipping industry.


The association pointed out the conflict of interest when a single entity assumes multiple roles such as cargo carrier, Container Freight Station (CFS) operator, land transporter, clearing and forwarding (C&F) company owner, and manager of an empty container depot.


Such practices, the lobby group argued, undermine the principles of fair competition and hinder the growth of local enterprises.


As Kenya positions itself to leverage the African Continental Free Trade Area (AfCFTA) for broader market access, the KTA emphasised the urgency of establishing robust structures to protect local investors.

More on Business


ADVERTISEMENT