Tough times for Mombasa as business investors come, go
In the port city of Mombasa, investors come and go, but John Mburu has stood the test of time. The renowned businessman has carved a niche for himself as a cutting edge investor, oozing every touch of success in virtually every enterprise he has touched.
For a man who has effortlessly handled ship contracting at the Port of Mombasa for more than three decades, one can only expect the high-flying veteran businessman to be at the top of his game, especially at a time the government agencies are speaking of success in port business.
However, after 35 years of investing in the port-related business, Mburu has decided to shut down his ventures and kiss the port city goodbye because his enterprises are no longer viable.
Times are tough for businesspeople in Mombasa.
Hundreds of Mombasa investors have been left in limbo by the recent introduction of new clearance policy, requiring all cargo destined for Nairobi and beyond, be evacuated via the Standard Gauge Railway and cleared at the Inland Container Depot, Embakasi, Nairobi.
“I am closing down my second business this year,” says the dispirited businessman as he supervises the loading of his office furniture onto a standby truck ready to exit the town, perhaps, for good.
With clearing firms shutting down, the reality of Mombasa becoming a ghost town is creeping in fast—and frighteningly for many investors.
Offices, malls, eateries and even banks are among business premises being vacated en masse, leaving behind shells of empty structures staring at the panoramic view of the expansive bubble gum blue Indian Ocean like a drunken stupor.
As you enter the central business district (CBD) at night, it is immediately evident that something is wrong. The cool neon lights illuminating the new look tiger blue and white painted buildings, which uniformly distinguishes structures in the coastal city, gather and laugh down at the lone pedestrian. Sometimes the roads remain deserted for a moment leaving traffic lights blinking to control the non-existent cars.
For Mburu, who has done ship contracting at the port beside a chain of other businesses since 1984, Mombasa “has never sunk this low economy-wise”.
“Our businesses are dying and we have no option now but to close…even the works that we used to do for the shipping agents all those years now have been taken over by others,” says the businessman, who also owns several apartments in Mombasa.
Giant firms in the logistics sector such as Mitchell Cotts are among those affected. When we toured the company in Kibarani this week, there were minimal activities and there were clear signs that the firm could be headed for the exit. None of the available officials was willing to speak to the press. They said the only personnel authorised to talk to the media were out of the country.
Transport and logistics sectors have been the first casualties to be suffocated by a mandatory usage of cargo train to evacuate cargo from the port of Mombasa to ICD-N.
Last week, truckers were being stopped from collecting cargo from the Port to Container Freight Stations (CFS).
Kenya International Freight and Warehousing Association (Kifwa) chairman Roy Mwanthi confirmed the concerns that indeed, some of his members are being barred from collecting cargo by truck.
“Actually, I have received numerous complaints about this…we are trying to find a solution,” said Mwanthi.
Kenya Transporters Association now fears this could be the beginning of an end of an era of truckers as hundreds of trucks are being edged out of the road.
Already, more than 50,000 truck drivers have lost jobs to the SGR according to KTA chief executive Dennis Ombok.
KTA chief operations officer Mercy Ireri said: “Being barred from ferrying cargo will mean that 107 drivers could be declared redundant in the next few months and already this has started to crawl in.”
Already Kenya Association of Manufacturers (KAM), Container Freight Stations Associations of Kenya (CFSAK), Kenya National Chambers of Commerce and Industry (KNCCI), the Transport Workers Union (TWU) and the Truck Drivers Union (TDU) have announced that they will lay off hundreds of employees following the new policy.
But the impact is ruthless, as it appears ready to go for jugulars of every business within Mombasa, popularly referred to as County 001.
One can only wonder how Mombasa, once a bustling city known to attract droves of visitors just like green lantern does to moths in the dark, is silently drifting into graveyard silence.
The once busy streets like Jundani Meru road, between Digo Road and Msanifu Kombo road as well as the Customs House road adjacent to Kenya Revenue Authority (KRA), which have been known preferred joints for clearing brokers, have now been deserted
Driving along Nkrumah Road all the way to Moi Avenue in the CBD, you are struck by the unusual lull, a complete departure from what is characteristic of the areas. It is easy to notice that several eatery joints and offices along these stretches have closed down. This is most conspicuous in once-thriving spots as Ambalal.
Dr Benedict Mutuku, CEO of Goldwyne Consult, a Real Estate consultant, says he has witnessed nine of 10 eatery joints next to his office shutting in the recent past.
“Mombasa has been depending on the port. This is where most business is coming from. So these people in clearing and forwarding have been here to do business. By the containers being moved to the ICD, it means that also the clearing firms are moving there and that’s why the economy has been affected,” says the CEO.
At Goldwyne, he says, the effect has already been felt in that a majority of clients who buy their properties are mainly people from Mombasa.
“Effect is already seen because, for example, I had a project in Bamburi which I had to lower the prices because there were no customers. Most of our clients are people either from KPA, Kenya Maritime Authority or the clearing agents. They have been giving us a lot of businesses. Just the other year, we would easily sell two to three units in a week, but right now, even selling a single unit is a problem,” he says.
Before the crisis started filtering in, the property dealer says his company did a 52-unit Vescon Plaza which was the tallest building in Bamburi and “we were able to sell all the units going for between Sh4 million and Sh4.5 million within a year.”
However, he says, currently a project they are undertaking in Utange on an eighth of an acre has stumbled into stagnation and they have been forced to lower the price from Sh7.5 million to Sh6 million and still no one is interested.
According to Mutuku, the absence of clients has come with an unheard-of phenomenon, where even the value of land has started to depreciate instead of appreciating.
“Previously, a plot in Utange could go for as high as Sh2.5 million but right now, they have gone as low as Sh1.5 million,” he says.
But there is more as you go further around the CBD paying keen attention to details.
George Kinyanjui, a landlord, who owns a 30-bed capacity Likani Guest House and Promise pub and café, is contemplating closing down.
“Since they started clearing cargo in Nairobi, my businesses have started running into losses and the best thing to do is to shut down,” he says.
Kinyanjui says clearing agents have been his number one clients for all his businesses ranging from rentals, eatery joints, guest rooms and pubs.
However, he says, some of his most loyal clients have disappeared completely in the past six months.
“Mombasa imekufa sasa. Wewe tembea. Ukitembea usiku hata huoni mtu (Mombasa is dead. You just walk around. If you walk around at night you will not see anybody),” he says adding, “I have already laid off 10 workers and now I see my businesses on a death bed.”
He says it is no longer tenable to run an enterprise considering that the operation cost requires him to part with Sh200,000 annually in licensing fee; Sh38,400 monthly tourism regulatory fund, Sh3,500 tourism fund every month, yearly single business permit of Sh18,000 and Sh50,000 for liquor licensing.
Chief Executive Officer of Myspace properties, Mwenda Thuranira describes the move by the government to force evacuation of cargo via SGR to Nairobi as “Market Terrorism,” saying it has killed land and rental business along the Nairobi Mombasa highway.
Mombasa businessman Suleiman Shahbal, who has also invested in housing and banking sector says Mombasa is “on a sharp downward spiral. And as it sinks, it will drag down the whole coast with it.”
“Container Freight Stations have already let go of more than 3,000 people who were employed either directly or indirectly. The transport sector is dead,” said Shahbal, adding that the national government must implement a Marshall Plan for Mombasa.
He says by utilising CFSs as free ports and fast-tracking, Dongo Kundu Special Economic Zone (SEZ) could be the only way to restore the dying city.
“Instead of closing the CFSs, they should be turned into 10 mini free ports. Let them import various items duty-free and allow foreigners to come to Mombasa to shop just as it happens in Dubai,” Shahbal posted on his Facebook page
Coast legislators and civil society organisations have since criticised the government directive as “sheer economic sabotage” and vowed to move to court.
MPs Abdulsamad Sharrif (Mvita), Badi Twalib (Jomvu), Khatib Mwashetani (Lunga Lunga) and Haki Africa Executive Director Hussein Khalid say the decision was made without public participation and vowed to stop implementation of the directive.