Revival of national shipping line a big mistake

Monday, February 6th, 2023 05:22 | By
Revival of national shipping line a big mistake

The Government wants to revamp and operationalise the Kenya National Shipping Line (KNSL) and Government Clearing Agency (GCA) by amending the law to enable the two institutions to exclusively handle State imports and exports.

Once the law is changed, all Government imports and exports whether by air, land or water will be cleared by these two State Owned Enterprises (SOEs). Tens of clearing and forwarding agencies that have been clearing Government cargo will be thrown out, and will probably have to close down.

Several issues need to be thought through before the Government implements this idea.

First, KNSL collapsed due to mismanagement and fraud, like so many other parastatals. What has changed?

Further, it has definitively been proven that governments cannot run businesses. The case of the Kenya Government is particularly acute, going by its abysmal record of running parastatals over the decades. Why does the Government want to repeat the same mistakes? The space the revival of these two entities opens for chicanery, corruption and fraud should make the Government not even attempt this. Secondly, Government ministries seem to be operating in echo chambers and at cross purposes. On the one hand, President William Ruto has very powerfully proclaimed himself on his stance towards commercial parastatals- they should be divested 100 per cent! He has even pledged to privatise 10 parastatals through the Nairobi Securities Exchange (NSE) within a year.

The Government cannot be undertaking a strong privatisation programme in the front office, and behind its own back creating more parastatals. There is a complete dysfunction somewhere. Thirdly, has anybody bothered to calculate the cost of establishing the capacity these two entities require for them to become fully operational to clear billions of shillings worth of Government cargo? The Government says it wants to save Sh3 billion a year- against what financial outlays?

It will require to employ and train people, buy vehicles, open offices and equip them, allocate working capital etc. This is a Government that is seriously cash constrained. Is this what it should be spending its money on at this time? Fourth, this move will kill tens of private companies who have been efficiently undertaking this task on behalf of Government. As they say, if it ain’t broke, don’t fix it. Is the service the Government is receiving now so bad it needs to be changed at all?

The cost will be high. Companies will close, people will lose jobs, investments worth billions will go to waste, taxes paid by these private businesses will be lost, and as sure as night follows day, the new SOEs will very soon be embroiled in mismanagement and inefficiency. This experiment is not worth it.

Both KNSL and GCA will never ever achieve the operational efficiency and value for money of its private sector counterparts in this field.  Fifth, let State agencies stop interfering in private sector business through poorly thought out “great initiatives.” Has it been forgotten surely, so soon, the havoc that the Government Advertising Agency (GAA) wreaked in the media industry by purporting to act to, wait for it,” save the government billions in advertising spend? The GAA chaos will destabilise the media for years and take as long to unravel. The Government needs to walk back on this idea on intervening in purely commercial business, and let the private sector handle it. Stop competing with your citizens!

The Principal Secretary of Shipping and Maritime Shadrack Mwadime, who is pushing this agenda, should instead be focusing on how to make Kenya a transhipment and blue economy hub like Dubai and Singapore, and stop distracting himself with small logistics.

— Gathu Kaara can be reached at [email protected]

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