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PROCUREMENT & LOGISTICS

Africa’s Leading Supply Chain Journal

June, 2017 Issue No.: 11/2017

KSHS. 400.00 TSHS. 8,000.00 USHS. 12,000.00 RFR. 4,000.00 USD. 5.00

Management

Kenya writes a Historical Transport Masterpiece, a sight and development to behold

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MARINE INSURANCE East Africa attracts insurance firms

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PROCUREMENT

KPC wants women, youth and disabled to participate in government procurement

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AVIATION ROUNDUP

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Procurement & Logistics Management Magazine monthly publication a year and circulated to professionals in the Supply Chain industry, members of relevant associations, government bodies and other personnel in the procurement, logistics and finance industries as well as suppliers in Africa. The editor welcomes articles and photographs for consideration. Material may not be reproduced without prior permission from the Publisher. DISCLAIMER: The publisher does not accept responsibility for the accuracy or authenticity of advertisements or contributions contained in the Journal. Views expressed by contributors are not necessarily those of the publisher. © All rights reserved. No part of this publication may be copied or reproduced without prior permission from the publisher.

Hello Reader!

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elcome to another edition of Procurement and Logistics Magazine where we continue to inform you on the new trends and developments in the logistics industry as well as the entire supply chain. In this edition, we’ve done a supplementary on Rail Transport with focus on the Standard Gauge Railway (SGR), the most transformative project and a development that has come after a century replacing the Metre Gauge Railway (MGR) that was established at colonial time. According to President Uhuru Kenyatta, Madaraka Express is a true living symbol of the journey the government is undertaking. It is the foundation for better income for farmers, manufacturers and other businesses. SGR entrenches Kenya’s position as a regional hub and opened up opportunities for new markets for goods and services, giving the nation a comparable advantage to compete against other ambitious countries for manufacturing, investments that will bring jobs for young people. We have looked at SGR project as historical transport masterpiece, a sight and development to behold, SGR success will ride on developing other facilities, Kenya readies for the first standardgauge line and many other stories on the project. Away from Standard Gauge Railway, we have also looked at the Marine insurance where we found that East Africa attracts insurance firms due to the new rule on marine insurance with Kenyan companies set to enjoy the new Marine cargo insurance law. We have also looked at clearing and forwarding where Federation of East African Freight Forwarders Associations (FFFA) and cargo clearing agents in East Africa are pushing for the establishment of national authorities to oversee the industry. Other stories include cargo tracking and Borderless Tracking Limited is providing solutions that help transporters comply with regulatory obligations. We have not forgotten procurement where Kenya Pipeline Corporation wants women, youth and the disabled to participate in government procurement and also Gulf African Bank procures business opportunities for women. These are just but highlights. Grab a copy and enjoy your reading

Cheers Okumu S BIKO Chief Editor

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CONTENTS COVER STORY

20 Kenya writes

a historical transport masterpiece, a sight and development to behold

BRIEFS 4.

Demand for warehousing increases as importers resort to leasing Kenya exports to Europe must be protected-EAC 5. Trends in Transforming Future of Freight Management Kenya marks a new dawn in the transport sector-SGR 6. Kenya government should support KNSL to enable trained Seafarers East Africa attracts more insurance firms- thanks to the new rule on marine insurance 7. China’s Hainan Airlines to buy 19 Boeing jets for $4.2B Sebastian Mikosz takes over the reign as Kenya Airways CEO 8. GM is quitting India, SA for more profits in China and North America Truck manufacturer to set up Sh2.5B assembly plant in Kenya 9. Petroleum dealers demand laws to curb fuel adulteration Tullow makes more oil discoveries 10 Jambo jet plans to start African flights in December 2017 11. Kenya exports to Europe must be protected-EAC 2

WAREHOUSE

12. Warehousing demand rises in Kenya

12 CLEARING AND FORWARDING 14. East Africa attracts shipping firms thanks to the new rule on marine insurance 15. East African customs adopt new systems to manage fleet along the Northern corridor

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REPORTS

34. Kenya awaits Kampala and Kigali to plan SGR beyond Kisumu 36. Plastic paper bags ban bites ahead of september 1 deadline

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EVENTS

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24. Unlocking west africa’s economic conference 25. Ethiopia to host 2017 Global CCA Perishable Conference

PROCUREMENT

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MARINE INSURANCE

16. East Africa attracts marine firms thanks to the marine insurance 17. Kenya’s insurance company develops online marine insurance portal

26. KPC wants women, youth and disabled to participate in government 27. Gulf African Bank procures business opportunities for women

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BRIEFS

Demand for warehousing increases as importers resort to leasing

“Today, the growth of SMEs in Kenya has exploded and contributed to an increase in logistics services such as warehousing,” says Meshack Kipturgo, Siginon Group Managing Director.

Kenya exports to Europe must be protected-EAC

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number of importers today have turned to utilisation of leased factors of production which are cheaper for retailers as opposed to the importer absorbing the cost and risk of running a non-core operation such as logistics while running the enterprise. “The indstry has lately witnessed a surge in investment activity as investors look to cash on untapped potential in the sector.” Kipturgo According to industry players, warehousing in Kenya is registering peak demand from shippers who require the facilities for temporary storage before distribution or onward transit to the region’s amid growing interest in Kenya as a business hub. Kipturgo says Kenya’s unique geographical position has made it a key transit point for cargo destined for the local market as well as the region.

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ccording to State House Spokesperson Manoah Esipisu, during the trade conference in china President Uhuru Kenyatta reached an agreement with China to fund the next phase of SGR. Kenya Railway Corporation (KRC) is yet to release Official figures for phase two, although Nairobi- Naivasha section is estimated at about US $ 1.5 billion.

The government has secured more funding from the Export-Import(Exim) Bank of China for the extension of the railway line from Naivasha to Kisumu city, where it intends to build a new port.

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BRIEFS

Trends in Transforming Future of Freight Management

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he freight management industry witnessed some massive changes in 2016 and some of these are likely to last beyond 2017. Shipping services and logistics providers are now trying to adapt to these trends to survive the disruption. Below are breakthroughs that will further push the boundaries of logistics management and stay dominant globally. Incorporating Automation Robotic systems are now taking over all the tedious and time-consuming tasks of picking up goods and placing them in warehouses. The use of the technology in loading cargo on tow trucks and container ships and unloading it at distribution centers and delivery points has bridged the gap between customer demands and business needs. Shifting towards Sustainability Logistic management is going green by implementing practices and strategies that conserve energy and reduce the carbon footprint. From making carrier fleets more energy-

efficient to limiting the count of empty trucks traveling to distribution centers, the freight management sector is saving thousands in the pursuit of protecting the environment. When it comes to sustainability, companies are minimising the number of shipments needed by installing truck scales that accurately measure truckload capacity while preventing overloading. Outsourcing Vital Business Operations Outsourcing is one of the logistics management trends that is altering the way services are delivered whether it is the handling of freight data, managing transportation, making payments, analysing big data or adoption of automation. Outsourcing administration has doubled the operational efficiency of third party logistics using decade-old tools and procedures. The rates that were earlier determined by classification are now being calculated by density which requires that shipping companies assess everything from size and weight to demand and availability. Outsourcing offers a cost-effective solution to staying efficient, improving productivity, and bringing in more profits.

Expanding Service Capabilities Logistic management is struggling with the increasing shortage of truck drivers which has created the need to adopt advanced technology or implement a strategic approach to freight management. This shortage is only expected to grow in 2017, so to expand service capabilities carriers are counting on third party platforms that facilitate real-time sharing of load information. Enhancing Network Agility Logistics management is expanding with increasing reliance on thirdparty networks and local shipping services for overnight pickups and same day deliveries of cargo. They are now also using smart pricing strategies and affordable cost models as a response to the sudden increase in shipping demands and eroding markets. of drones and autonomous vehicles for delivery of products is just the beginning. Warehouses and distribution centers are also being automated with sensor technology and RIFD tagging for speedy and streamlined operations. more affordably.

Kenya’s marks a new dawn in the transport sector-SGR

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he first phase of the Standard Gauge railway (SGR) is finally operational, running alongside the metre gauge line established at colonial times. The President made a number of stopovers to commission newly built terminus before concluding his trip aboard the SGR train in Nairobi. The major SGR terminus included include Mariakani, Miasenyi, Voi, Mtito Andei, Kibwezi, Emali and Athi River before making his way to the capital. China who provided the funds through loans that the SGR was built sent a delegation comprising members of its State Council who will include two ministers and a vice-minister for the launch, says the State House Spokesperson.

President Uhuru Kenyatta officiated the launching event at the container terminal at the end of May before embarking on a train ride. PROCUREMENT & LOGISTICS MANAGEMENT JUNE 2017 Issue No.: 11/2017

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BRIEFS

Kenya government should support KNSL to enable trained Seafarers secure Jobs-SUK S eafarers Union of Kenya (SUK) calls on the government to support the Kenya National Shipping Line (KNSL) so that those who have been trained can secure jobs. SUK secretary general Steve Owaki says Kenya’s maritime sector is currently facing a labour glut as Bandari College churns out more graduates, who are left to fend for themselves. 500 seafarers trained at the college between 2014 and last year are awaiting absorption while 131 more students are undergoing training. The secretary general was speaking at Sarova Whitesands Beach Resort during a meeting between SUK, Kenya Maritime Authority (KMA) and Central Organisation of Trade Unions (COTU).

Bandari College trains Form Four leavers on standards of training, certification and watch keeping, a mandatory course covering fire-fighting, first aid and personal safety. It also offers certificate and diploma courses in marine engineering and nautical science.

East Africa attracts more insurance firms- thanks to the new law on “The policy marine insurance directive from The Intergovernmental Standing Committee on Shipping (ISCOS), is spearheading marine cargo insurance initiative in all the member states.

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he shipping agency is currently focusing on East and Southern African countries to make shippers buy marine insurance in their respective countries.

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Already Kenya is setting the pace, with the Insurance Act requiring that all imports are insured. The regional shipping agency was formed by the four states (Kenya, Tanzania, Uganda and Zambia) in 1967 to perform various functions on their behalf such as negotiation on freight rates, fighting against unjustifiable surcharge and other charges on seaborne cargo. Kenneth Mwige is the ISCOS secretary general, “We have already held meetings with the Pensions and Insurance Authority of Zambia, the Insurance Association of Zambia (IAZ), the Uganda Insurance Association, the Zambia Shippers Council (ZSC), the Uganda Shippers Council (USC) and the Tanzania Shippers Council (TSC).”

ISCOS’ coordination committee gives it impetus to drive to on-shore MCI in the region. The projected savings and retention of hard currency in ISCOS member states’ economies runs into several hundred million dollars every year for the region.”

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BRIEFS

China’s Hainan Airlines to buy 19 Boeing jets for $4.2B

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hina’s Hainan Airlines, which has poured billions of dollars into overseas acquisitions, announced plans to buy 19 Boeing aircraft for $4.2 billion to help meet skyrocketing travel demand by Chinese consumers. The company said in a statement to Shanghai’s stock exchange that it would buy 13 Boeing 787-9 passenger jets and six 737-8s, citing the continued “rapid growth” in China’s travel market as incomes rise. It plans to issue 15 billion yuan ($2.18 billion) in bonds to help fund the deal.

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Chinese airlines have seen booming business in recent years, rushing to expand their fleets and route networks amid growth that the International Air Transport Association (IATA) predicts will take China past the United States to become the world’s largest air-travel market by 2024. Hainan Airlines and its parent HNA Group have been among the most acquisitive players in a wave of overseas investments by Chinese companies in recent years.

HNA is a sprawling conglomerate with interests in aviation and tourism. Last year alone, HNA purchased Brazil’s third largest airline Azul, Swiss airline catering company gategroup, and stakes airline Virgin Australia and Portuguese national airline TAP. A unit of privately held HNA announced plans to buy the aircraft leasing business of US-based CIT Group Inc. for $10 billion. The Chinese government has encouraged companies to invest overseas to open up new markets.

Sebastian Mikosz becomes Kenya Airways chief executive officer

he Kenya Airways (KQ) board has appointed Sebastian Mikosz as the new Group Managing director and chief executive officer. He takes over from Mbuvi Ngunze who had stated his intention to step down from the national carrier back in October. Mikosz’s appointment ends a rather long and rigorous recruitment process that had on two occasions been delayed. The new Kenya Airways CEO will take assumed his post on June 1. Hethe head of e sky, a travel agency

based in Poland but has previously served as the President and CEO OF LOT Polish Airlines. Kenya Airways chairman Michael Joseph said the new CEO will have his work cut out, in trying to steer the airline back to profitability after years of turbulence. “We have no doubt that under his leadership and guidance the airline, with support of management and the board will strive to greater heights and achievements as well as continue to regain its altitude as the pride of Africa,” Mr Joseph said.

Sebastian Mikosz

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BRIEFS

GM is quitting India, SA for more profits in China and North General Motors plans America to quit selling vehicles

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he Detroit automaker said that it will take a $500 million charge in the second quarter to restructure operations in India, Africa and Singapore. It will cancel most of a planned $1 billion investment to build a new line of low-cost vehicles in India. About $200 million of the charge will be a cash expense, GM said. The moves are expected to save $100 million a year in a sector of GM’s global business that last year lost about $800 million, the company said. Dan Ammann is GM President. “The latest restructuring moves and a series of earlier decisions to quit unprofitable markets, allow GM to focus more money, engineering effort and senior management time on expanding where the company is strong, including China and the North American pickup and SUV business, where GM has a “product onslaught coming.” He says GM is investing about $600 million a year in efforts to develop autonomous vehicles and transportation services. “What are we spending our time doing?” Ammann asked. “Are we spending time pursuing opportunities … or all of our time fixing problems?”

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his will be the third assembly in Africa after plants in South Africa and Morroco. Volvo Trucks President Claes Nilsson says the plant will be launched in the first quarter of 2018 targeting an output of 500 units per year. Nilsson says the firm will bring to the market top modern trucks that have specifications for the east African region. “We see great opportunities and believe that this part of Africa that has potential to grow substantially; it has a lot of different resources due to the diverse production of different products and natural resources.” He says business condition in

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in India and South Africa by the end of this year to focus cash and engineering effort on fewer, more profitable markets.

Truck manufacturer to set up Sh2.5B assembly plant in Kenya Kenya is that, one has to have a manufacturing plant, otherwise you are not a serious player in this market. The plant will be done through a partnership with NECST Motors who are now the exclusive importers of Volvo trucks in the Eastern African region. The planned investment is expected to create approximately 300 direct jobs in addition to other indirect employment opportunities. The firm is eyeing 20 percent market share in the next three to five years. “We have been in East Africa for the last three decades and believe that there is a significant potential for the premium truck business as regional economies grow, infrastructure invest-

ments expand and the business environment remains investment friendly,” Nilsson said. Volvo Trucks regional office has been opened in Nairobi which will be responsible for expanding the footprint of the brand in East Africa.

Volvo Group is set to invest a Sh2.5 billion assembly plant in Mombasa, eyeing the East African region market.

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BRIEFS

Petroleum dealers demand laws to curb fuel adulteration

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n the meantime, Kenya Revenue Authority KRA has deployed 2,000 police officers in the Northern Corridor to curb the rampant fuel diversion, dumping and adulteration. Florence Otory is the KRA North Rift Regional Coordinator, “This will ensure that perpetrators are apprehended and charged with fuel diversion or adulteration offences.” According to Otory, the authority has also upgraded the Regional Electronic Cargo Tracking System that is currently operational in Rwanda, Uganda, and Kenya, following a directive from the heads of state summit held in Kigali Rwanda. Otory however asked Kenyans to remain vigilant and weary of cheap fuel and fuel products

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Kenyan petroleum dealers are demanding that stringent laws, and punitive fines be put in place to curb fuel adulteration and tax evasion by unscrupulous dealers as well as strict border monitoring.

Tullow makes more oil discovery in Turkana well

frica-focused oil company Tullow Oil Plc said it encountered 75 metres of net oil pay in two zones at an exploration well in Northern Kenya. The Emekuya-1 well, located in the South Lokichar basin in NorthWestern Kenya, would eventually be developed to full field development, the company said on Wednesday. The well has proven oil charge

across a significant part of the Greater Etom structure, Tullow said. “The discovery not only adds more recoverable resources to the current portfolio, but, along with Etom-2 and Erut-1 (wells), establishes the ‘northern triangle’ part of the South Lokichar Basin as an independent production hub,” Morgan Stanley analyst Sasikanth Chilukuru said. Tullow operates Blocks 13T and 10BB with 50 percent equity and is partnered by Africa Oil Corp and

Maersk Oil with 25 percent each. The Emekuya-1 well is located in Block 13T. Earlier this year, the company said its Erut-1 well, located in the same block, discovered oil with 25 metres of net oil pay. According to Davy Research, Tullow’s latest guidance for discovered resources in the South Lokichar Basin was 750 million barrels. Shares of the company were up 2.9 percent at 207 pence by 0810 GMT on the London Stock Exchange.

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BRIEFS

Jambo jet plans to start African flights in December 2017

“We have fulfilled all that is required of us and I do not know which routes we shall start off with since this is subject to negotiations with our parent company Kenya Airways.” 10

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ambojet has set a December target for launching international operations on 11 new routes after the budget carrier acquired a new aircraft from a Moscowbased leasing company as part of its expansion. The low-cost airline, a subsidiary of Kenya Airways expects to receive regulatory approval to expand business beyond Kenya later this month, having fulfilled all conditions. Jambojet has applied to fly to Dar es Salaam, Zanzibar, and Kilimanjaro in Tanzania, Blantyre and Lilongwe in Malawi as well as to Uganda, Ethiopia, Somalia, and the Democratic Republic of Congo (DRC) among others. To serve its domestic customers and the upcoming routes, Jambojet has leased a 78-seater Bombardier Q400 from Ilyushin Finance Co (IFC), with a second aircraft scheduled for delivery in November. “I hope to get our air service licence (ASL) later this month. The moment we receive the second aircraft we will be ready to launch our regional routes,” said Willem Hondius, Jambojet chief executive. “We have fulfilled all that is required of us and I do not know which routes we shall start off with since this

is subject to negotiations with our parent company Kenya Airways.” Mr Hondius was speaking in Toronto, Canada, when receiving the new aircraft at Bombardier’s factory. The plane, which is valued at Sh3.2 billion, arrived in the country on Sunday. Jambojet flies to six routes in Kenya; from Nairobi to Mombasa, Eldoret, Kisumu, Lamu, Malindi and Ukunda. The airline, which was launched in 2014, has been in the market for new aircraft to serve the busy coastal routes, which were in December hit by flight delays and cancellations. The firm leased a Q400 from Abu Dhabi Aviation in January to replace one of the older versions of the aircraft in its fleet and stabilise operations since another plane was out on maintenance. “I hope to have between eight and 10 aircraft in the next five years. We shall keep to one aircraft type to keep maintenance costs low,” said Mr Hondius. “With the new planes our reliability will improve greatly. Whatever happened in December should never happen again.”

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BRIEFS

Kenya’s exports to Europe must be protected-EAC

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ast Africa heads of states will petition the European Union (EU) for penalizing Kenya’s agricultural products exported to Europe. Ugandan president Yoweri Museveni, who was appointed as the new EAC chairman during Heads of State summit in Dar es Salaam was tasked to present Kenya’s case. President Museveni warned EU against punishing Kenya which has already signed the agreement. “I want to assure this Summit that my first assignment is to lead a delegation to Brussels, Belgium, in my capacity as new Chairman to give our stand on the matter as well as ask them not to punish Kenya on the matter as we come up with lasting solution to the problem,” Museveni.

He adds, “We object any move by EU to harm Kenya as far as EU-EAC issues are concerned. What we mean is that Kenya should not be disadvantaged since the country has already signed the agreement.” The Ugandan President said he will harmonise the organization’s position on the Economic Partnership Agreement and EAC that allows countries in the region export agricultural products to Europe without attracting tax. He was speaking at the 18th Ordinary Summit of EAC Heads of States held in Dar es Salaam -Tanzania on Saturday attended by Deputy President William Ruto on behalf of President Uhuru Kenyatta where he said, EAC is committed to solving the stalemate surrounding the EU-EAC over EPA once and for all.

“We object any move by EU to harm Kenya as far as EUEAC issues are concerned. What we mean is that Kenya should not be disadvantaged since the country has already signed the agreement.”

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WAREHOUSE

WAREHOUSING DEMAND RISES IN KENYA New business models like leasing have led to increased demand

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he warehousing industry in Kenya is currently experiencing increasing demand from shippers seeking safe storage of their shipments for distribution or onward transit to neighboring countries. This has been attributed to various factors including a growing interest in Kenya as a business hub. Kenya’s unique geographical position has made it a key transit point for cargo destined for the local market as well as into the region. Today, the growth of SMEs in Kenya has exploded and contributed to an increase in logistics services such as warehousing. In addition, a number of importers today have turned to utilisation of leased factors of production which are cheaper for retailers as opposed to the importer absorbing the cost and risk of running a non-core operation such as logistics while running the enterprise. Siginon Global Logistics, part of the Siginon Group, is a logistics player that has invested heavily in warehousing to meet customer demands. Currently, Siginon has about 300,000 square feet of warehouse capacity in its Nairobi and Mombasa operations licensed to handle cargo that is general, bonded or on transit to regional destinations. Winstone Akweyu, the Operations Manager at Siginon Global Logistics in Nairobi adds, “The General cargo warehouses have the highest demand with customers largely importing shipments such as textiles, pharmaceuticals, spare parts and chemicals among other commodities.” Siginon warehouses have additional options which are customised to handle shipments that require storage at ambient temperatures and cold storage, such as some pharmaceuticals and horticultural produce, to protect them from depreciating in quality or value due to exposure to external temperatures. Customer experience in warehousing is primarily focused on assuring the customer of cargo safety as well as ease of accessing the goods while in the warehouse. This can be attributed to the tonnage and value of cargo placed in the warehouse. As such, warehouse players have invested heavily in warehouse safety and security to protect the cargo from theft or damage while in the warehouse. Winstone adds, “Siginon warehouses are secured with high walls, 42h CCTV as well as contracted manned personnel from reputable security companies.

Ruth Nduta Brand and Corporate Affairs Manager Signon Group Ultimately, assuring the customer of the cargo security will give them peace of mind.” Global warehousing trends today have expanded to incorporate value addition services such as packaging in the case of Fast Moving consumer goods (FMCG), blending of varieties in the case of the tea warehousing

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LOGISTIX CONSULT

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WAREHOUSE

“There are a number of opportunities of automating warehouse operations through automation of storage, compact picking, zone picking, integrated picking as well as warehouse and AGV systems.“

and distributing the goods to outlets, the port for export as well as delivering to the factory on a ‘just in time’ basis to ensure payment of taxes only on goods exiting the customs bonded area as well as eliminate demand on space. Globally, amazon.com has disrupted the logistics industry with adoption of technology and innovation to run its process. Amazon today boasts of over 30,000 robots to run its warehousing space in the fulfilment centers. The robots have revolutionized service delivery as well as boosted efficiency in stock management. These trends have set the pace for players in warehousing to move in tandem with the key focus being customer satisfaction and efficiency in cargo delivery while minimizing the need for human intervention. In as much as the Kenyan market is yet to pick on these innovations, a number of efforts have been made by the various logistics players to incorporate technology to boost service delivery. Winstone concludes, “There are a number of opportunities of automating warehouse operations through automation of storage, compact picking, zone picking, integrated picking as well as warehouse and AGV systems. Though these systems require high capital investments, the returns on business and customer satisfaction are equally high in the long run.” Logistics services are today driven more to meet the customer demands for convenience and efficient service delivery. With growth of Kenya’s position as a key business hub in the region, it is likely that sufficient investments will be made to match global and customer trends in service.

For further information, please contact: Ruth Nduta, Brand & Corporate Affairs Manager E: corporate@siginon.com PROCUREMENT & LOGISTICS MANAGEMENT JUNE 2017 Issue No.: 11/2017

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CLEARING AND FORWARDING

FEAFFA want member states to enact national laws to streamline the industry By Daniel Edwards

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ederation of East African Freight Forwarders Associations (FEAFFA) and cargo clearing agents in East Africa are pushing for the establishment of national authorities to oversee the industry In Kenya, the agents have engaged Kenya Revenue Authority KRA in a court battle demanding that KRA be compelled to expedite the issuing of licences. The approximately 3,000 want the mandate of licensing to be handed over to an independent body instead of being licensed by the Customs Departments of the region’s revenue authorities. However, KRA wants to vet the agents with the intentions of revoking licences of companies implicated in corruption that has seen Kenya loss millions in tax revenue annually. According to KRA, some of the 1,200 cargo agents in Kenya have been colluding with Customs officials to evade tax and run contraband smuggling rackets, particularly at the port of Mombasa. Records at KRA show that the authority has seized close to 200 containers stuffed with contraband goods at the port over the past 12 months. The increase has been blamed on cargo clearing agents colluding with Customs officers and unscrupulous importers and exporters.

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Despite efforts by KRA to fight rogue agents, stakeholders still want their licensing done by an independent body. The players have drafted a model Bill in which they propose the creation of competent national authorities in each East African Community partner state to license Customs agents and freight forwarding practitioners. John Mathenge is the director-Federation of East African Freight Forwarders Associations executive, "The reason why we are pushing for self-regulation through a model Bill is to enhance professionalism and compliance with rules and regulations. This will end corruption in the industry." Mathenge says due to inadequate legislation, the federation wants regional governments to use the model Bill to enact national laws to streamline the industry, which has operated without clear guidelines and a strong legal framework. Meanwhile, only Tanzania has tried to enact a law to govern the industry, but the Bill drafted has never been tabled in parliament. Mathenge, "As trade intermediaries, we play a vital role in the economy, and it is important for governments to appreciate this fact. Services of clearing agents are critical in ensuring the success of the region's Single Customs Territory and Common Market Protocol.” While Commissioners of Customs in East Africa noted that it is important to

streamline the clearing and forwarding industry, supporting the formation of different bodies to license agents is not yet be on their agenda.

"As trade intermediaries, we play a vital role in the economy, and it is important for governments to appreciate this fact. Services of clearing agents are critical in ensuring the success of the region's Single Customs Territory and Common Market Protocol.”

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CLEARING AND FORWARDING

East African customs adopt news systems to manage fleet along Northern corridor "There has

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he customs authorities in the region have adopted an electronic system to track Lorries travelling between Kenya, Uganda and Rwanda to speed up journeys. At least the officials and traders will be able to monitor trucks travelling to and from the Kenyan port of Mombasa. The device will be attached to vehicles and is intended to help prevent hijacks and goods being tampered with. The land locked -Uganda, which pioneered the project, says sometimes the journey could be cut from threeand-a-half days to just 36 hours. Known as the Regional Electronic Cargo Tracking (RECT), will apply to the main road stretching from Mombasa port to the Rwandan capital, Kigali, known as the "Northern Corridor". Officials will be able to monitor journeys on a map and be able to immediately detect any detours. Statistics indicate that about 90% of goods through the region are transported by road with the risk of cargo being targeted by criminals. According to Customs officials, even the drivers have also been known to take diversions and siphon off freight, for example offloading coffee and adding stones to make up the missing weight. Kassim Omar the chairman of the Association of Clearing and Forwarding Agents in Uganda says, "There has always been that unpredictable aspect of not knowing whether your goods will reach or they won't reach and that in itself is a very serious discomfort, now this will resolve that problem." He says the level of assurance guarantees the buyer abroad or the supplier from this end that what was sent will be what is contained in that particular container. The system will also mean that all appropriate tax is properly declared. Bernard Kibiti, from the Kenya Revenue Authority adds that the amount of time spent clearing goods at Mombasa ports will also be significantly reduced. According to Kibiti the whole process would be more efficient and would result in less paperwork.

“From Mombasa to Rwanda's capital, Kigali, a truck spends about 80 hours stuck at border posts. A lorry is stopped at either side of the KenyaUganda border, taking an estimated 40 hours to clear both, and the same time at the Uganda-Rwanda border. With the electronic tagging a driver will be checked and present their papers once at each border.� The three East African Community countries hope the seamless movement of goods enabled by the electronic cargo tracking system will attract even more investment to the region.

always been that unpredictable aspect of not knowing whether your goods will reach or not won't reach and that in itself is a very serious discomfort. The system will not resolve that problem."

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MARINE INSURANCE

East Africa attracts marine firms thanks to the marine insurance

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he Intergovernmental Standing Committee on Shipping (ISCOS), is spearheading marine Cargo insurance initiative in all the member states. The shipping agency is currently focusing on East and Southern African countries to make shippers buy marine insurance in their respective coun-

tries. Already Kenya is setting the pace, with the Insurance Act requiring that all imports are insured by Kenyan underwriters. The regional shipping agency was formed by the four states (Kenya, Tanzania, Uganda and Zambia) in 1967 to perform various functions on their behalf such as negotiation on freight rates, fighting against unjustifiable surcharge and other charges on seaborne cargo. Kenneth Mwige is the ISCOS secretary general. We have already held meetings with the Pensions and Insurance Authority of Zambia, the Insurance Association of Zambia (IAZ), the Uganda Insurance Association, the Zambia Shippers Council (ZSC), the Uganda Shippers Council (USC) and the Tanzania Shippers Council (TSC). “The policy directive from ISCOS’ coordination committee gives it impetus to drive to on-shore MCI in the region. The projected savings and retention of hard currency in ISCOS member states’ economies runs into several hundred million dollars every year for the region.” ISCOS will meet again with Zambia’s stakeholders early December in Lusaka, and is expected that action will be taken by the government of Zambia, which is a major exporter of raw materials as well as being a major importer of finished goods. Records at ISCOS indicate that Burundi, Congo, Kenya, Rwanda, Tanzania, Uganda, Malawi and Zambia, exported insurance premiums on marine worth $ 4.89 billion between 2009 and 2013. Mwige, “Almost $5 billion in only one electoral cycle donated by warm, kind and generous Africans to appreciative, graceful and eternally friendly foreigners. Uganda has also complained of huge premium revenue ceded to foreign marine underwriters. Data compiled by Uganda Insurers Association last year showed that the latter have received an estimated $335 million in the past four years.”

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The Insurance Act 2011 states that all exporters and importers are required to procure marine insurance with local companies, but various agencies particularly the Insurance Regulatory Authority and Uganda Revenue Authority have not been aggressive in enforcing this law, Mwige says. There is no restriction on a country to enact laws to protect its domestic insurance industry

“The policy directive from ISCOS’ coordination committee gives it impetus to drive to on-shore MCI in the region. The projected savings and retention of hard currency in ISCOS member states’ economies runs into several hundred million dollars every year for the region.”

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MARINE INSURANCE

Kenya’s insurance company develops online marine insurance portal

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hrough the online platform, clients are able to self-manage their accounts through a user friendly portal, giving ease access for importers from anywhere in the world to interact with us in a convenient, fast and easy way,” Patrick Tumbo Jubilee Insurance Kenya Chief Executive Jubilee Insurance launched its marine cargo online portal early in the year to enable its customers and intermediaries manage their own marine insurance policy at the click of a button. The online portal gives clients ability to set-up accounts, through which they can make declarations as they ship in their goods, obtain instant marine certificates, self-service their policies and report claims as they happen. Jaideep Goel, Jubilee Insurance General Business Manager says the portal will also enable authorities to verify and validate all certificates issued through the portal, minimizing the risks of fraud. According to Goel, the online solution is in order as it has become mandatory for importers of marine cargo to use local insurers for their underwriting services. The government during the 2016/2017 budget presentation announced that from January this year

under the Insurance Act Section 20, an importer must insure his cargo with a registered insurance company in Kenya, as opposed to the current model which importers can choose to insure the cargo with an international insurance company. “This opens up the Marine underwriting business worth Ksh20 billion, which is expected to boost the Jubilee Insurance books in the short term and cement its market share. It was a great move as the directive provided an avenue to grow the local marine insurance business and in turn grow the economy through investments made in with the premiums collected," says Tumbo. The Marine Insurance act enacted in 1968 provided guidelines of how marine insurance business should be conducted to safeguard the goods being shipped into the country by importers by sea or Air. However, majority of the importers used to buys goods on Cost Insurance Freight (CIF) from their suppliers which meant it was the supplier's responsibility to purchase the insurance abroad on behalf of their clients, which a times was not the case. "It is our goal as Jubilee Insurance to continue providing solutions to safeguard our client's future in the most innovative ways. We would want to be

in the forefront of clients' satisfaction as this new area of growth opens up," Tumbo concludes

“This opens up the Marine underwriting business worth Ksh20 billion, which is expected to boost the Jubilee Insurance books in the short term and cement its market share”.

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TECH BUSINESS

Kenyan firm develops a mobile app to connect car hire providers and drivers to potential customers “There are a number of car rental service companies. However, most of them do not address the issue of convenience and variety. People are looking for services they can access on the go. They also want a platform they can compare different cars from different providers and cost.”

Steven Omollo CEO Vacation Kenya

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acation Kenya has developed mobile app, dubbed Dingah, which seeks to connect car hire providers and drivers to potential customers using smartphone. The app. allows users to spontaneously rent cars with their mobile phones rather than making reservations in advance from their desktops or carrental services. Steven Omollo is the apps founder and CEO of Vacation Kenya, “There are a number of car rental service companies. However, most of them do not address the issue of convenience and variety. People are looking for services they can access on the go. They also want a platform they can compare different cars from different providers and cost.” It allows rental companies or individual car owners to sign up. The process involves vetting of the cars. Those that meet the criteria, the owners are

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then allowed to upload all the necessary documents and images. Those who are looking for car to hire can browse through the app, selecting the vehicles of their own choice. In addition, they also select the delivery point and where they would wish drop the car once their lease period is as over. Omollo says the charges are not fixed. However, the cost is determined by the car owners and those hiring out the cars. The app allows the two parties to reach an agreement based on their preferred price. The app also gives users a choice between hiring the vehicles on selfdrive basis or chauffeur driven. The application offers the driver in a minute service that operates under a GPS platform. The company charges KSh40 per kilometre. Those preferring chauffeur driven services can hail a driver to take them to their destination. “The driver, arrives at your home, dressed professionally, ready to drive you in your vehicle where

you want to go. When ready the driver will drive you and your car back home safely.” The service is chargeable per kilometre and reflects on the application on both the client and the driver’s phone. Omollo says the firm vets drivers and only after a successful vetting that drivers are placed in either chauffeurs or driver in a minute. He adds that all chauffeurs have ID cards that you can scan through the app for security purposes. To further expand its scope, Omollo says Dingah is also offering car hire services for trucks for those moving homes, heavy machinery for construction, tractors for tilling land as well as helicopter rides. This he says helps distinguish Dingah from other ride hailing apps such as Uber, Mondo ride among others. “Dingah is designed to allow customers request quotes from a transport provider. If the two agree on the service, the user selects the pickup and destination of his product.” Dingah is available for download on android devices. The market growth in the car hire business, which is driven by domestic demand, has also been helped by the increased number of tourists arriving in the country. “Using technology has been proved to make the whole process safe, quick, reliable, and easy for consumers. Further, the hassle-free process of online car hiring or bookings increases convenience.” According to Grand View Research, the global car rental industry has been experiencing a transformation in the last few years. Operators, have undergone a series of changes in their business models to stay relative, competitive and enhance profitability. According to Omollo, the influence technology has on the industry has driven the transformation of the car rental services. Omollo says the growing trend of using the Internet for customizing travel trips and online reservations and bookings is anticipated to propel the use of technology in the industry. In conclusion, he says plan is underway to launch and introduce the service and app throughout the country.

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TECH BUSINESS

Uber’s driverless trucks set to take on the highways

By Daniel Edwards

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o not get startled if you happen to spot a self- driving vehicle roaming around as they have actually made an entry into the real world, sooner than one thought. Uber, the world's largest ride-sharing company, decided to take the giant leap by acquiring Otto, a 90-person start-up including former Google and Carnegie Mellon engineers that is focused on developing self-driving truck technology to upend the freight sector. While Uber’s aggressive expansion around the world has been received by many with a sense of doubt, its latest move underlines its willingness to experiment. In a deal worth an estimated $680 million, the San Francisco-based Otto has become an independent division within Uber, working on the concept. The idea is to replace the dual-trucker system by one trucker and a computer. Otto is experimenting on a fleet of six modified white Volvo truck cabs,

equipped with radar, cameras and lidar-which maps in 3-D using lasers. Although Uber is also working on autonomous cars to carry passengers, but experts believe speeding into the market of commercial trucking world is less challenging as there are fewer problems to solve compared to passenger vehicles and thus wider chances of acceptability. The Otto team is currently trying to equip the trucks to drive themselves solely from exit to exit on highways, for long hours. The truck steers itself at the set limit of 55 mph on the highwaywhich normally is free of pedestrians, traffic lights, bicycles or any unpredictable obstacle or social situations that arise on urban streets. The team believes with the right automation technology, chances of crashes would come down in such automated trucks as compared to the vehicles driven by fatigued drivers. This would in turn save on insurance, while there would be an increase in fuel efficiency by up to a third. Otto’s endeavor is to give charge of the truck to its computer for 8-9 hours that would allow the trucker to go to sleep, without halting in between. However, it still requires nerves of steel to ride in such a vehicle as one needs to let go of his belief that man is

Otto is experimenting on a fleet of six modified white Volvo truck cabs, equipped with radar, cameras and lidar-which maps in 3-D using lasers.One has to take better than machine. that leap of faith hoping the machine would steer in the right direction and in the right amount as he is actually giving the control of his life to it. In this case, the machine has to be a better driver than humans, which can see the roads better than them. Eyebrows were raised when Joshua Brown, 40, of Canton, Ohio, was killed driving a Tesla Model S in the first fatality involving a self-driving car. Nonetheless, it is still the early stage for self-driving technology and therefore has huge challenges to meet. Uber is also focusing on its ambitious plan of commencing selfdriving taxis to ferry customers around Pittsburgh as soon as this month, a first for the industry in a race among automobile and technology companies to make driverless cars commercially available. Although it seems to be a bold step, but Uber would place its employees in the front seat of each vehicle. Considering the challenges one faces in the urban driving, chances are these driverless taxis would probably be available in small, controlled areas. Nonetheless, the effort signals a breakthrough in commercialization of the technology and if successful, this is surely going to create a new source of income for Uber and in broader sphere, revolutionize the transportation sector.

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COVER STORY

Kenya writes a historical transport masterpiece, a sight and development to encountering numerous challenges like her behold “Despite predecessor, the metre gauge Railway (MGR) which is

more than a centenary old now, Standard Gauge Railway (SGR) finally becomes operational, easing morbidity between the country’s capital and the port city.

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COVER STORY

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ravelling to the port city of Mombasa from Kenya’s capital 483km away could take upto 12 hours approximately. This has taken a different feel as the new standard-gauge line which runs alongside the colonial-era metre-gauge railway reduces the same journey by eight hours. SGR is a sight and development to behold. It is the largest single infrastructure project since Kenya gained its independence in 1963, and features eight underpasses where it crosses the world-famous Tsavo National Park. The Railway also has 98 bridges, including two large structures at points where it traverses the existing line, which is part of a 1918KM network linking Kenya with Uganda operated by concessionaire Rift Valley Railways (RVR) since 2005. Atanas Maina is the Kenya Railways Corporation (KRC) Managing Director, “The 472.3km line, 442.6km runs at grade and the total bridge length is 29.7km. “There are 33 stations along the line, of which two will be traffic hubs at both ends and eight will be intermediate stations while 23 will be passing stations.” He says the line has been designed with an axleload of 25 tonnes and could move 22 million tonnes a year at a speed of 80-100km/h for freight trains and 120km/h for passenger trains. Each of the freight trains will have a haulage capacity of 4000 tonnes, or 216 TEUs, and accommodate double-stack containers. However, electrification of the line, which was initially incorporated into the design, will have to wait a little longer because of the lack of an adequate and reliable electricity transmission platform. The new line also runs parallel to the Mombasa - Nairobi highway which is laden with truck traffic. Statistics at Kenya National Bureau of Statistics (KBS) indicates that port of Mombasa’s freight throughput was up by 11.5% from 22.3 million tonnes in 2013 to 24.9 million tonnes in 2014. The container volumes at the port also increased by 13.2% to one million TEUs in 2014 up from 894,000 TEUs in 2013. Zachary Mwangi is the KNBS director general. “The rise in TEUs was partly because of the improvement of the facilities at the port and the improvement of the single window platform that allows online transactions for international trade, thereby maximising port efficiency.”

Passengers enjoy a ride inside one of the standard gauge railway He points out that RVR’s freight traffic is improving despite a sharp drop in passenger traffic in recent years, and it is this growth on which state-owned KRC is pegging its projections for the new line under the expectation that this momentum will continue. Indeed with the World Bank projecting Kenya’s economy to have grown by 6% last year compared with forecasts of 4.5%, demand is increasing for modern infrastructure to support the country’s steadily expanding GDP. Financing Exim Bank of China agreed to support the new line 90%, or $US 3.42bn, of the project’s costs. The overall loan consists of a $US 1.6bn concessional loan payable over 20 years and a commercial loan of $US 1.82bn payable over 15 years. The two loans have been guaranteed by Kenya’s National Treasury. Yet achieving sufficient traffic volumes on the Standard-Gauge line to meet the cost of operations and repayment of the loan at this stage is far from assured. As a result the project is not without sceptics. In an interview with news correspondent in Nairobi, President of the Kenya-based AB International Enterprise, Dr Anil Bhandari, who is also a former World Bank senior infrastructure advisor for the Africa Region said it is not definite how KRC will ensure that

required rail freight traffic uses the new line when RVR is competing in the same market. Anil Bhandari, “In my view, there is no adequate freight that can be moved by both the standard-gauge link and the metre-gauge line operated by RVR.” Bhandari says, “Passenger numbers are so low currently and with proper rehabilitation of the metregauge by RVR, the freight volumes could easily be increased to about 15 million tonnes, which could have been easily done without a new standardgauge line.” However, KRC’s chief of technical services Solomon Ouna during an infrastructure conference in Nairobi said SGR feasibility study indicated that the revenue stream “would cover the cost of operation and maintenance as well as external loan obligations and post good surplus for capital projects.” Ouna, “The existing metre-gauge railway has serious challenges in capacity provision due to obsolescence and unresponsiveness to any meaningful upgrade efforts. Kenya’s railway problems are difficult to solve using the same narrow gauge technology which create the present railway problems.” The corporation is expected to own SGR infrastructure but appoint an operator for the line, which is acceptable to China Exim Bank in accordance with the government’s financing agreement with China.

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COVER STORY The financing deal also requires the Kenyan government to meet any revenue shortfalls when the line becomes operational and also to modernise and expand the existing inland container terminal at Embakasi on the outskirts of Nairobi to handle containers using the new railway. Bhandari proposes that KRC should go a step further by appointing two contractors - one for operations and the other for maintenance with the corporation owning the infrastructure. “KRC should also consider an open-access model for the standardgauge line where companies with their own trains can use the line at specified times and pay the corporation an access fee,” Bhandari says. Despite the uncertainties with the freight passenger projections and doubts over future competition between the two lines, Maina is also optimistic that both lines will carry sufficient volumes. “The growth of freight handled by the port of Mombasa is increasing and there will be sufficient volumes for both the standard-gauge and the existing metre-gauge railway,” he says. Whereas the hope is that once operational the line will provide the foundation for further economic growth in Kenya and East Africa, the first phase of the project has already provided additional jobs. Maina says the project has provided nearly 19,000 local people with direct employment and about 6000 indirectly.

In 2014 RVR’s Kenyan freight traffic grew by 24.3% from 1.24 million tonnes in 2013 to 1.51 million tonnes with Mwangi attributing it to the acquisition of three new locomotives and the rehabilitation of the existing fleet. However, RVR has been grappling with falling passenger numbers, with a 5% reduction in journeys from 4 million in 2013 to 3.8 million in 2014. “The drop in passenger journeys was partly attributed to suspension of railway passenger transport services along the Nairobi - Kisumu route,” Mwangi says. It is hoped that the improvements will attract passengers to return to the existing network. It’s a similar story on its metre-gauge suburban services in Nairobi which cover 160km of track and are currently used by 13,000 people every day. KRC is also targeting improvements in the capital’s rail services and is implementing the Nairobi Commuter Rail Service project which involves modernising and expanding under-utilised railway infrastructure to boost public transport in Kenya’s capital. Specific components of this project include upgrading of track and signaling systems, constructing a new 6.5km line from the Syokimau station to Jomo

Metre gauge Development of the standardgauge project comes as RVR invests investing $US 305M to rehabilitate the Mombasa - Nairobi - Malaba - Kampala railway and improve rolling stock, with funds coming from loans ($US 164m), equity ($US 100m) and company cash flow ($US 41m). “In the first five years of the concession, RVR is set to remove infrastructure bottlenecks, resolve priority track rehabilitation issues and continue with maintenance capital expenditure,” says Sammy Gachuhi, chief marketing and commercial officer at RVR. Gachuhi says RVR is addressing efficiency on the metre-gauge line by overhauling information technology, signaling, operations and locomotive systems to achieve modernised operations. He adds that the concessionaire’s strategy is to “maintain the existing client base and grow freight volumes by 15-20%.”

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Kenyatta International Airport and adding new stations. Maina said in February that KRC has submitted fresh requests for funds to finance construction of the airport rail link, which was first mooted in 2011, and he says this and other rail projects are now a major element of Kenya’s Vision 2030 strategy for economic development. He adds that KRC is working tirelessly to improve its operations and facilities, enhance skills and technology transfer, and be a key strategic player in the transport industry, thus be a key contributor to national development. The standard-gauge line is a sign of real progress and evidence that the government is starting to deliver on its vision to promote sustainable growth in Kenya and the rest of East Africa as the region strives for full common market status. And with other projects planned, all eyes are now on this line and its ability to facilitate the fast and safe movement of goods and people between Nairobi and Mombasa. If successful, the momentum to develop these other projects is expected to grow.

SGR project

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BRIEFS EVENTS

Unlocking west africa’s economic Potential through port optimisation and development conference

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5% of all trade conducted in West Africa is through its ports. For this reason, investors have recognized the value of West African ports and have invested millions of dollars into the region's ports. The 2017 will be held from September 5-6 in Accra –Ghana. The 2017 edition of AFRICAN PORTS EVOLUTION - WEST AFRICA will give coastal and hinterland stakeholders proven, future-proofed solutions and alternatives for demand driven port expansion to enable better planning for infrastructure development. Participants will take home solutions and alternatives that can be used to aid in the modernisation of their facilities, boost the integrity of their operations and make informed assessments as to whether to rehabilitate existing facilities or expand infrastructure. The key driver for this forum is to enable and facilitate African solutions for African challenges and present and encourage the business case for a single window system.

WHY ATTEND?

AFRICAN PORTS EVOLUTION - WEST AFRICA is designed to provide an intensive and focused onestop-shop for the region’s maritime sector. Expect all the latest trends, technology solutions and project updates at your fingertips. This interactive and innovative forum will enable learning, knowledge-sharing and bench-marking of best practice to maximise port through-put. The conference assists the West African maritime sector to remain adaptable, motivated and responsive as an industry, with the ultimate goal of promoting dialogue between government and the private sector and enhancing collaboration between inter-regional partnership and joint ventures.

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THE STRATEGIC CONFERENCE WILL BE HIGHLY INTERACTIVE AND SOLUTIONS-FOCUSED. Panel discussions & round tables cover the following topics: • Enhancing port competitiveness while driving port collaboration • Understanding the benefits of the Port-City Nexus: why ports should create reciprocal synergies with t heir surrounding communi ties • Using IT solutions to drive port efficiency, optimisation and cost control • Developing a single vision strategy for the West African region by establishing a data matrix for each port • Promoting international trade through en hanced port safety and security • Solving local capacity and skills gaps in the sector • Turning environmental impact challenges into opportunities Currently port competitiveness in the region and the greater African continent are at a tipping point, with the number of expansion and developmental projects taking place. At African Ports Evolution West Africa, you will hear up-to-date information about port projects and the most successful ports in the region. The audience / Who should attend? This event will have a distinctively West-African audience allowing sponsors to meet ports authorities and decision-makers from across the region all under one roof. • Ports authorities • Terminal operators • Government agencies and ministries • Logistics • Freight forwarders • Shipping lines • Bulk exporters and users of ports

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EVENTS • • • • •

Finance and investment organisations Research and development agencies Industry associations EPCs Suppliers of products and services to the sector (this list is not exhaustiv • Networking and matchmaking oppor tunities

This event will unite the entire maritime ecosystem for extended networking opportunities including matchmaking sessions. The business matchmaking sessions will give port authorities the opportunity to have one-on-one meetings with financiers and technology providers. Bringing the private and public sector together provides ample new business opportunities and the cultivation of existing relationships.

Sponsorship opportunities

Gain direct access to new business prospects, delivering you a real return on your investment. African Ports Evolution – West Africa is convenient and cost-effective and will enable you to meet the entire value chain and conclude several months of customer interaction in just 2 days. Participating in this forum as a sponsor is a valuable investment and provides a unique opportunity to generate leads, raise brand awareness and do business with qualified buyers. Companies offering the following products and services should exhibit or sponsor: • Marine engineering and construction • Dredging • Logistics • Suppliers of large ports and maritime equipment • Oil and gas • Environmental consultants • Marine insurers/attorneys • EPCs • Ship building and repair companies • Port security • Material handling

Ethiopia to host 2017 Global CCA Perishable Conference

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old chain services that support perishable food distribution globally are estimated to be valued at nearly $250 billion. And if the world had a properly functioning cold chain, food losses due to perishables shipping can be brought down to just 2 per cent. Given the critical need for a better dialogue between the logistics sector and perishable producers and shippers, the Cool Chain Association and The STAT Trade Times is hosting the Global CCA Perishable Conference, this time in the African continent. The conference aims to address the latest trends in temperature-controlled logistics, to find innovative solutions to common challenges and tackle issues related to trade barriers, infrastructure and distribution involved in perishables transportation. The Global CCA Perishable Conference, to be held on June 26, 2017 at Sheraton hotel, Addis Ababa, Ethiopia will open dialogue and offer a platform for exchange of ideas, knowledge and solutions to improve the perishables supply chain. The one-day session invites perishable logistics and transport professionals from around the world to discuss and develop scalable, sustainable solutions to expand and improve the cold chain. The conference also seeks to explore key macro-economic, trade and supply chain trends worldwide, as well as new niche opportunities. In addition, the Global CCA Perishable Conference also aims to develop cold chain skills and infrastructure within the African continent. Bringing under one roof, global and regional providers of cold chain logistics, transport services and infrastructure to meet with Africa’s perishable producers and shippers, the conference looks at identifying new opportunities that will allow African countries to compete in global markets.

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BRIEFS PROCUREMENT

KPC wants women, youth and disabled to participate in government

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he initiative is in line with the Government of Kenya policy of enabling marginalized sections of society to access at least 30 percent of government procurement opportunities. KPC is holding sensitization workshops for the special groups in Mombasa, Nairobi, Nakuru, Eldoret and Kisumu which have benefited small businesses drawn from different parts of the country. The MD says over the last four years, the company has invested over Sh2.7 billion in supporting the programme across the country. “This financial year alone, we have spent over Sh1.12 billion to support women, youth and persons with disability. This is 100 percent of what we had budgeted for.” Earlier on (2013), President Uhuru Kenyatta had directed that the procurement rules be amended to allow 30 per cent of government contracts to be given to the youth, women and persons with disability without competition from established firms. “Access to Government Procurement Opportunities (AGPO) initiative aims to facilitate the youth, women and persons with disability-owned enterprises to be able to participate in government procurement,’ sang. A procuring entity shall allocate

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at least thirty percent of its procurement spend for the purposes procuring goods, works and services from micro and small enterprises owned by youth, women and persons with disability. Speaking during the sensitization, KPC’s General Manager for Supply Chain, Vincent Cheruiyot, said the common reasons for delay in payment include arithmetical errors on the invoice; delay in submission of the invoice by vendors; supply of wrong items; Invoice without ETR; partial supply without invoice and lack of credit notes. “Despite the change in law to allow special groups to access opportunities to supply government with goods and services, their participation has been hindered by Insufficient training on public procurement laws,” said Cheruiyot.

Cheruiyot said the training provided during the sensitization workshops will improve skills and ability of special groups to participate in AGPO.

Joe Sang Managing Director (KPC)

“We aim at enhancing awareness, building capacity, increasing transparency and promoting competition for public tenders, says Joe Sang Managing Director Kenya Pipeline Company (KPC) He was Speaking during a sensitization workshop, KPC’s, when KPC was training at least over 1,000 youth, women and persons with disability-owned enterprises to be able to participate in government procurement.

This sensitization drive has been designed to increase the participation of special groups such as women, youth and persons living with disability in public procurement to help alleviate poverty and curb unemployment.”

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BRIEFS PROCUREMENT

Gulf African Bank procures business opportunities for women

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he initiative, which is in partnership with UN Women, additionally seeks to open up procurement opportunities to Women-Owned Businesses while seeking to empower them. Data at the Kenya National Bureau of Statistics (KNBS) indicate that women are locked out of procurement opportunities although over 60.7 percent of all unlicensed establishments are owned by women. Jabri, “With this move, we are hoping to become the leader in providing procurement opportunities in the private sector and inspire others to follow our example.” The company is also offering unsecured LPO financing to women of up to Sh20 million for those with prior performance history and up to Sh3 million unsecured LPO business for starters. She was speaking during a workshop organized by the company to promote supplier diversity and inclusion, while also promoting their Annisaa program which seeks to empower and educate their women clientele. As signatories to the Women Empowerment Principles (WEPs) Gulf African Bank has committed to champion principle 5 of WEPs. “We have embarked on this exciting and innovative journey in partnership with UN Women – to become the leader in providing procurement opportunities in the private sector and inspire others follow our example,” said Mr. Abdalla Abdulkhalik, MD Gulf African Bank.

Zinabua Hailu has benefited from a special line of credit for female entrepreneurs backed by the World Bank’s fund

“We are seeking to increase the number of women vendors’ customers from the current 4.4 percent to 20 percent by the end of this years, says Najma Jabri, Head of the Bank’s Women and Youth Banking at Gulf African Bank. She says the bank aims to open business opportunities for Women-Owned Businesses in the bank’s supply chain.

Najma Jabri

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BRIEFS TRANSPORT AND LOGISTICS

Kenya’s first SGR cargo train now on the rail

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resident Uhuru Kenyatta has delivered the promise of launching the Standard Gauge Railway (SGR) by the first of June 2017. Speaking when he flagged off of the first Standard Gauge Railway cargo train at Port Reitz in the coastal city of Mombasa, President Kenyatta said the move shows how the country can achieve greater heights if Kenyans can work together with a common purpose. “This indicates what we can achieve if we work together as a nation. The foundation we are laying today is not just for us; it’s for generations to come,” he said. He said the historic moment is not just for the Jubilee administration but a proud moment for every Kenyan. He called upon all citizens to stand together and remain united in order to make Kenya prosperous. “We have invested about $600 million at this Mombasa Port in the last two and a half years. That shows that we mean business, we have continued to invest in making it easier for Kenyans to do business,” he added. The new Chinese-built route is aimed at cementing Kenya’s position

28

as the gateway to East Africa and is billed as the biggest infrastructure project since independence, and a key selling point for the ruling Jubilee party ahead of the August elections. Tuesday’s launch precedes the unveiling of the maiden passenger from Mombasa to Nairobi on Wednesday morning. On board will be President Kenyatta, Cabinet Secretaries and top government officials among others selected to take the maiden trip to the capital city- as well as 47 pupils from all the counties. The project was built at a cost Sh327 billion with 90 percent financed by China Exim Bank with the Kenyan Government investing the rest. Financing of the second phase of the SGR project from Nairobi to Naivasha has already been sourced from Chinese Government. The cargo train is expected to carry about 216 containers at a go. The new train is set to reduce the cost of moving goods in the country, making Kenya an economic power house in the region. According to the Kenya Railways Corporation, freight charges for the

containers will be at Sh50,000 per container compared to the current Sh80,000 by the metre gauge railway train and Sh90,000 by road. “This is a proud moment for the Jubilee administration. We have had many challenges that include the court cases and environmental issues. This showcases a unity of purpose from the Jubilee administration,” said Deputy President William Ruto. Others present during the flagging off of the cargo train included First Lady Margaret Kenyatta, Interior Cabinet Secretary Joseph Nkaissery, Transport Cabinet Secretary James Macharia, Tourism Cabinet Secretary Najib Balala and Foreign Affairs Cabinet Secretary Amina Mohamed

“We have invested about $600 million at this Mombasa Port in the last two and a half years. That shows that we mean business, we have continued to invest in making it easier for Kenyans to do business,”

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BRIEFS TRANSPORT AND LOGISTICS

Understanding value of SGR heralds athe new dawn IoT private to IOT for connectivity Kenya, the ingateway and transportation the public East and Central African

region.

• people (both drivers and passengers); • vehicles; and • road infrastructure.

K

enya marked a new dawn when the Standard Gauge Railway, which replaces the more than a century-old colonial railway line, rolled out its cargo services at a colourful ceremony at the port of Mombasa this evening. The onset of the operation of the most outstanding of President Uhuru Kenyatta’s flagship projects heralds a new dawn for Kenya, the gateway to the East and Central African region. With the unveiling of the new Railway’s cargo operations in Mombasa this afternoon, Kenyans and the more than the 300 million residents of the region are set to reap the benefits of efficient transportation of cargo. President Kenyatta waved a giant Kenyan flag to flag off the inaugural cargo train of the SGR shortly after 6.00 pm, at Port Reitz in Mombasa, marking a new era where cargo will be moved twice as fast and at a cheaper price. The ceremony was witnessed by thousands of Kenyans together with delegations and representatives from across the world. The image of President Kenyatta waving the Kenyan flag to launch the modern service, will forever remain etched in the memory of Kenyans who aspire to see their nation take it’s place in the new world order of the 21st century. It took the Jubilee Government two

and half years – less than the originally given time and less than the original budget – to accomplish the task of constructing 472 kilometres of the SGR from the port city of Mombasa to the capital city of Nairobi in the country’s interior. The Government has already embarked on extending the SGR to Naivasha then to Kisumu and eventually plans to have the system extended to Kampala and Kigali in Uganda and Rwanda respectively. President Kenyatta, who was flanked by Deputy President William Ruto and First Lady Margaret Kenyatta, said every Kenyan should be proud of the Standard Gauge Railway. “I call upon all Kenyans whatever their political beliefs to celebrate, today we should be together holding hands in celebrations,” said the President moments after the cargo train pulled alongside the Presidential Dias waiting for the flag off. It was song and dance as choirs played patriotic songs apt for the moment. “This is the Kenya we seek and this is the Kenya we want our children to inherit from us and their children to inherit from them,” said President Kenyatta amid applause, cheers and ululation. President Kenyatta said the SGR will make the port of Mombasa more efficient and will enhance the performance of the facility where the

Jubilee Government has invested more than Sh60 billion in the last four years. “The foundations we lay today will lead us to a new chapter of industrialisation,” said the President as he promised to fast track the establishment of Special Economic Zones along the SGR. Deputy President William Ruto said the launch of the services of the SGR was a proud moment for all Kenyans. He said it was President Kenyatta’s commitment that enabled the Government to complete the project despite the many challenges that it faced along the way including court cases and negative politics. “It is your commitment that has brought us where we are today and I am proud of your leadership,” said the Deputy President. Transport and Infrastructure Cabinet Secretary James Macharia said only a focused and committed government can achieve the feat of completing a project as big as the SGR in the manner the Jubilee Administration had done. The ceremony was also addressed by Chinese Ambassador to Kenya Liu Xianfa, President of the China Communications Construction Company Mr Chen Fen Jian and the Chairman of the Kenya Railways Gen (Rtd) Jeremiah Kianga.

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BRIEFS TRANSPORT AND LOGISTICS

“We as NTSA are happy to be part of this. There has been a lot of pressure on our roads, we believe this is one way of easing that pressure and we are looking forward to seeing the train work,”

NTSA says SGR train to ease traffic burden, reduce accidents

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he National Transport and Safety Authority (NTSA) says the Standard Gauge Railway (SGR) train will ease traffic congestion on the roads. Speaking in Mombasa before the launch of the passenger train by President Uhuru Kenyatta, Director General Francis Meja explained that this will also see a decrease in traffic accidents. “We as NTSA are happy to be part of this. There has been a lot of pressure on our roads, we believe this is one way of easing that pressure and we are looking forward to seeing the train work,” he stated. The new Chinese-built route is aimed at cementing Kenya’s position as the gateway to East Africa and is billed as the biggest infrastructure project since independence and a key selling point for the ruling Jubilee party ahead of the August elections. “This is also part of land transport and as we have said, there has been a lot of pressure on our highways especially the number of trucks we see on our highway, we believe when the cargo freight section of the railways will be fully operational, we should be able to lessen the pressure on our roads and even reduce accidents,” Meja said. There was a lot of excitement at Miritini station as passengers waited for the launch. A number of Kenyans including leaders, government officials and foreign dignitaries had already

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checked into the station by 9.00am. They expressed eagerness to be part of the experience and many believe other than offer fast and effective transportation, it will boost the tourism sector. “This is a new beginning for Kenyans as they have an easier and safer way of transport. Even now, other vehicles will reduce their fares since the train will be carrying many people,” one of the passengers said. “This is my first time to be on board a train and I am happy that I am making history at this moment by boarding and riding in the SGR train,” another stated. The maiden train named Madaraka Express was set to take off from Miritini station in Mombasa at 9 am, with President Kenyatta and a host of other top government officials on board. “I think we have started to do it. We still need to do a lot more because people do not know how much it will cost, what time it is going to leave, what are the schedules, a lot of that is work in progress.” “Comparable to a bus, the level of safety and the level of efficiency is high and that is one advantage of this train.” The train being launched Wednesday will be transporting up to 1200 passengers daily, charging between Sh1000 to Sh3000 to and from the coastal city. The new Chinese-built route is aimed at cementing Kenya’s position as the gateway to East Africa and is billed as the biggest infrastructure project since independence, and a key selling point for the ruling Jubilee party ahead of the August elections. The first cargo train on the SGR tracks carrying more than 150 containers arrived in Nairobi at midnight, having been launched by President Kenyatta in Mombasa

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BRIEFS TRANSPORT AND LOGISTICS

Victims of SGR vandalism will face Hangman

T President Uhuru Kenyatta

“I want to announce today that those who will be prosecuted for destroying Kenyans’ property; for destroying what belongs to our children, I pray for forgiveness from God, but I will sign their death sentence for them to be hanged.”

he President gave the warning on Wednesday as he launched the passenger train service in Mombasa. His declaration came after Director of Public Prosecutions Keriako Tobiko also warned that those arrested for vandalism will be treated as organised criminal gangs and economic saboteurs. He asked Kenyans to be supportive and help with constructive criticism, so the government can improve and ultimately have a world class working railway. The Chinese-funded and built railway is the country’s biggest infrastructure project since independence. It is also part of a master plan by East African leaders to connect their nations by rail, with the Standard Gauge Railway planned to eventually link Uganda, Rwanda, South Sudan, Burundi, and Ethiopia. The charges for containerised cargo from the Port of Mombasa to the Inland Container Depot in Nairobi are set at Sh50,000 per container. Other freight will be

charged at 0.07 per ton kilometre translating to Sh32,800. This will result in a 40 per cent decline in the cost of cargo transport in comparison to the Sh80,000 to Sh90,000 cost of transporting goods by road between Mombasa and Nairobi. In addition, the time taken to transport goods will reduce from the current 16-24 hours, to a maximum of eight hours. The Nairobi-Mombasa train has a capacity of 1,200 people with one round trip planned in the initial stage. More trips will be added subject to demand for the service. The passenger train services between Nairobi and Mombasa will cost Sh700 for economy class and Sh3,000 for first class, according to fares released by the railways management. The passenger service named Madaraka Express will operate the Intercity Train and the County Train. The Intercity Train is an express train between Nairobi and Mombasa and the County Train will make stops at Mariakani, Voi, Emali, Kibwezi, Mtito Andei and Athi River.

“Vandalising SGR will be treated as capital offence and if those caught in the act will hanged. People must understand the project does not belong to the Jubilee Government but all Kenyans, including future generations,”

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TRANSPORT AND LOGISTICS

TMEA grants KTA Kshs 53m to enhance quality and efficiency of road freight transport in Kenya

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onstraints along the Northern Corridor transport route have driven transport costs to an estimated 30% of the value of traded goods. Available data indicate that operational (both direct and indirect costs) and administrative costs for trucking companies constitute over 80% of the trucking charge. Kenya Transporters Association (KTA) and TradeMark East Africa (TMEA) signed a partnership agreement to enhance quality and efficiency of road freight transport in Kenya. According to an impact assessment study of the Northern Corridor, poor truck turn-around has been attributed to poor cargo off-take and delivery infrastructure, delays by transporters to pick cargo after Port release, delays within transporters facilities, and high frequency of stoppages along the Northern Corridor by drivers. On average, Kenyan trucks are presently doing 60,000 – 96,000 KMs/ truck/year driving transport costs to an estimated 30% of the value of traded goods. In the most efficient trade corridors, the average KMs/ truck/year is between 120,000 to 150,000 translating into significantly affordable transport and logistics costs of up to an average 4% of the value of traded goods. Kenya Transporters Association (KTA), as a signatory to the Mombasa Port Community Charter, has committed to work towards attainment of an average of 120,000 KMs/truck/ year. In order to meet this target, Kenya Transporters Association plans to enhance operational capacities of transport operators and offer policy and regulatory alternatives that support a conducive transport business environment in order to sustainably bring down the cost of transport. In this partnership, TradeMark East Africa (TMEA) has committed USD 532,549.50 to support KTA interventions that will contribute to

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enhancement of safety and service delivery through improved compliance with transport laws/regulations and industry standards leading to reduction in related costs, enhancement of legal protection of transport business through enabling transport policies and structural improvements resulting into a reduction in associated costs and enhancement of KTA’s internal capacity to deliver services to its members. The project, to be undertaken in three years, is ultimately expected to contribute to enhanced road freight transport productivity performance and competitiveness leading to a reduction in road transport operating costs and an eventual decrease in transport prices by an estimated 2-3%. “Freight costs per kilometer are more than 50% higher than costs in the United States and Europe, and for the landlocked countries, transport costs can be as high as 45% of the value of exports. The mission of TradeMark East Africa is to increase trade and prosperity in East Africa, primarily through investing in areas where there will be the biggest impact for East Africa’s people and private sector.” says the TradeMark East Africa (TMEA) CEO, Frank Matsaert. “TMEA has supported and continues to support a number of infrastructure enhancement projects across the region as well as structural and systemic reforms in government agencies and private sector orgaThe disbursement of will nizations. These interventions onlyfunds achieve meaningful success if from the Roads supported by reliable and efficient Maintenance Levy Fund road freight transport services. Cur(RMLF) by Kenya Roads. rently, road haulage accounts for over 94%Board in transport modal split making (KRB) to various it an integral component of trade road agencies and county and trade facilitation. An efficient is anticipated andgovernments reliable road freight transport is therefore imperative,” says the KTA to increase significantly to CEO, Mr. Otuke. KSh 40.9 billion in 2016/17 Presently, over 95% of the KTA from KSh billion in Members plying25.4 the Northern Corridor road network – which connects 2015/16.

the Port of Mombasa and the hinterland – handle over 20 Million tonnes representing 94% of the total Port throughput. Over 6 Million Tonnes of this volume (representing over 30%) is transit cargo. An efficient, reliable, safe, environmentally friendly and cost effective transport system is, therefore, critical in ensuring the productivity, competitiveness and sustainability of the corridor. TradeMark East Africa (TMEA) is an aid-for-trade organisations that was established with the aim of growing prosperity in East Africa through increased trade. TradeMark East Africa (TMEA) operates on a not-for-profit basis and is funded by the development agencies of the following countries: Belgium, Canada, Denmark, Finland, the Netherlands, Sweden, UK, and USA. TradeMark East Africa (TMEA) works closely with East African Community (EAC) institutions, national governments, the private sector and civil society organisations.

“Freight costs per kilometer are more than 50% higher than costs in the United States and Europe, and for the landlocked countries, transport costs can be as high as 45% of the value of exports. The mission of TradeMark East Africa is to increase trade and prosperity in East Africa, primarily through investing in areas where there will be the biggest impact for East Africa’s people and private sector.”

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REPORTS

Kenya awaits Kampala and Kigali to plan SGR beyond Kisumu

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hina is looking at extension of Standard Gauge Railway (SGR) from Kisumu to Uganda and Rwanda as a regional project that requires joint negotiations for funding. According to Beijing, joint negotiations (as East Africa nations) would minimise political risks and plug missing links. “China will finance the construction of the standard gauge railway from Kisumu in Kenya to Uganda and Rwanda as long as the three countries agree to handle the project jointly,” Beijing. This comes amid fears that the viability of the SGR within Kenya and beyond could be undermined by failing to link landlocked countries to the Mombasa port because of financial or other considerations. During China Africa Summit in Beijing two weeks ago, Chinese Prime Minister Li Keqiang asked President Uhuru Kenyatta to discuss the extension of the railway line from Kisumu

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EAC leaders sign deal with China to construct railway line to Kampala and then Kigali with Presidents Yoweri Museveni and Paul Kagame. “Li was clear that China would fund those sections as a regional project. President Kenyatta has already spoken with the leaders of Uganda and Rwanda on the possibility of sending a joint team to negotiate for financing of the remaining portion,” Kenya State House spokesman Manoah Esipisu. Esipisu, “The viability of the Nairobi to Kisumu line is okay. One feature of the SGR investment to Kisumu is the building of a modern port. Kisumu to Malaba is viable with Uganda and Rwanda on board.” Different sources agree that a joint project was appealing to the three countries. Uganda has been negotiating a $2.9 billion loan deal for the 293km section from Malaba to Kampala. Matia Kasaija is Uganda Finance Minister, “We have to wait for our neighbours to decide on the plans for the last phase of this project before we

can get the funds. China really doesn’t want to fund a white elephant project.” The Minister was speaking during an interview with the media where he said that China Export-Import Bank is only willing to fund the project if it is linked to the Kenya line at Malaba.

“China will finance the construction of the standard gauge railway from Kisumu in Kenya to Uganda and Rwanda as long as the three countries agree to handle the project jointly,”

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ENERGY

Kenya to ship out crude oil three times a year

K

enya will ship out crude oil from Turkana oilfields three times in a year as vessels require more than 10 times the daily output. The country is this month expected to evacuate 2,000 barrels per day from Turkana via road to storage tanks in Mombasa. Petroleum principal secretary Andrew Kamau said the oil will be stored at Mariakani refinery tanks for between three and four months and amass adequate quantities to fill a ship. “Kenyan oil will be exported about three times in a year. The oil must be accumulated for months to fill a ship,” said Mr Kamau. The small-scale crude production is expected to run until 2021 when Kenya expects to have its own pipeline. Tullow has stored more that 70,000 barrels of oil in Lokichar in preparation for the early export plan. The oil firm has been producing 2,000 barrels of crude oil per day and

building stocks ready for export. This means it will take a shorter time to accumulate the more than 200,000 barrels of crude for the first consignment to leave Mombasa port. Three Kenyan companies won lucrative contracts to provide trucks and oil tank-tainers for transportation of crude from Turkana fields to Mombasa port. Nairobi-based Primefuels Ltd bagged a tender to supply 100 tank-tainers, each with capacity to carry 150 barrels of crude. The firm is a subsidiary of Dubaibased Primefuels Group. Suppliers of trucks, on which the tank-tainers will be mounted, include Multiple Hauliers (EA) Ltd and Oilfield Movers Ltd. The two companies will each provide 23 trucks. Construction of the 865-kilometre pipeline between Lokichar and Lamu was estimated last year to be completed in the second quarter of 2021 at a cost of Sh210 billion. The line will enable Kenya to pump out about 100,000 barrels a day for export.

Turkana oil is classified as waxy and sticky, making it necessary to heat during transportation, a quality that is expected to determine the design of the pipeline. Kenya has so far struck 750 million barrels of oil, considered commercially viable, with ongoing exploration indicating the figure could cross the billion mark.

“Kenyan oil will be exported about three times in a year. The oil must be accumulated for months to fill a ship,”

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ENVIRONMENT

Plastic paper bags ban bites ahead of september 1 deadline Most supermarkets have stopped ordering new bags while others are using plain ones sold off road; at times shoppers are forced to carry their own bags

K

enya joined Tanzania and Rwanda in banning the use, manufacture and importation of plastics, despite stiff opposition from manufacturers in a gazette notice dated February 27 this year. Environment Minister Judi Wakhungu, said in a notice this March that the government had “banned the use, manufacture and importation of all plastic bags used for commercial and household packaging” effective from September this year. This new development by Kenya enabled the EAC Polythene Materials Control Bill 2016, easily sailed through the East African Legislative Assembly. The Bill now inches closer to an Act of the Community should the EAC Heads of State assent to the same. The Bill moved by Hon Patricia Hajabakiga, Member from Rwanda aims at providing a legal framework for the preservation of a clean and healthy environment through the prohibition of manufacturing, sale, importation and use of polythene materials. Justifying the move to have the regional law in place, Hon Hajabakiga stated that the Bill is intended to control the use of polythenes while advocating for the total ban of plastics. At the start of this year, Tanzania outlawed the use of the polythene bags, with an implementation date of July to allow for manufacturers to finish their stocks. Rwanda leads in the efforts to rid East Africa of the environmental nuisance the plastic waste has become. Kigali has successfully implemented a total ban on polythene bags since 2006. Uganda is said to be also considering an amendment to its 2009 law to effect a total ban. This March Kenyan and Ugandan manufacturers met in Kigali under the auspices of EABC where they both submitted their input on the proposed Bill, barely two months after Kenya successfully lobbied the EALA members sitting in Nairobi to drop a Bill that sort to impose a total ban on polythene bags in the region.

36

Kenyan manufacturers, who have opposed previous attempts by the government, said they had not been “extensively consulted” on the decision. According to Kenya Association of Manufacturers, more than 170 plastic manufacturing industries in Kenya employs over 60,000 people. The

six-month notice period may not be sufficient to transition and may affect the economy to unprecedented levels. Public-private partnerships are required in making the process as smooth and cost effective as possible. In 2005 Kenyan government implemented a ban polythene bags below 30 micron.

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PROCUREMENT TIPS

What is product HS Code? It is important to know HS code specially if you plan to go global in buying or selling and to talk loudly and in public atleast.

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he Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS) of Customs tariff description or nomenclature is an internationally standardized system of names and numbers to classify export traded products. It came into effect in 1988 and has since been developed and maintained by the World Customs Organization (WCO) Belgium, with over 200 member countries.The organisation was established in 1952 as the Customs Co-operation Council (CCC) is an independent intergovernmental body whose mission is to enhance the effectiveness and efficiency of Customs administrations worldwide. It comprises about 5,000 commodity groups; each identified by a six digit code, arranged in a legal and logical structure and is supported by well-defined rules to achieve uniform classification. CLASSIFICATION AND ADVANTAGES The harmonisation and refinement of tariff nomenclature are important and have a number of objectives and advantages: a) For tariff classifications speeds up the process of imports and exports by facilitating product comparabil ity at customs. basis for collection of excise and sales tax. simplifies trade transactions. b) For data collection ensures a comprehensive collection of data on the flow of goods between coun tries. by increasing comparability of data across countries, it provides a basis for analy sis of trade data for decision making. In the Harmonised System Convention, products are classified under 21 sections. Ranging from “Live Animals; Animal Products” in Section I to “Textiles and Textile Articles” in Section XI to “Works of Art, Collec-

tor’s Pieces and Antiques” in Section XXI. In each section, products are further subdivided in double digit Codes (termed “chapters”). Hence, for e.g. HS Code 01 is “Live Animals”, HS Code 17 is “sugars and sugar confectionery” etc. Codes in digits beyond the two-digit level would represent further refinements to the description of the product (termed “sub-headings”). The Harmonised System only provides for descriptions up to the HS 6-digit level. Examples of the HS categories and how it is working include: 72.06.10 – Ingots of Iron and Non-alloy Steel72.06.90 – Iron and Non-alloy Steel in Other Primary Forms In each of these examples, the chapter heading is 72 which represents Iron and Steel. The next level of detail is the 06, which represents “iron and non-alloy steel in ingots, etc. nesoi” (“nesoi” stands for “not elsewhere specified or included”). Finally, the “10” and “90” provide an even more detailed level of description of the goods in question. Although this example includes only six digits, some countries (South Africa included) have categories with 8 or even 10 digits in total, suggesting two further levels of detail. For example: 72.121010 – Flat-rolled products of iron or non-alloy steel, width <600mm, plated or coated with tin: of a thickness of 0.5mm or more. HS codes may be represented slightly differently in different countries. Some include a dot between each two digits, while others may only show a dot after the first two digits representing the chapter number, while others may show a dot just before the last set of two digits, or even no dots at all (e.g. 72.06.10 or 72.0610 or 7206.10 or 720610). In addition, the exact categories and category descriptions may differ from country to country, especially at the higher levels of detail. The first six digits are fairly universal, however (although this does not necessarily mean that the same good will be given the same classification in every country using the system). It is only as one moves to eight or ten digits, where the differences between countries become more pronounced. Additional digits that appear in the tariff of a country using the HS are for statistical purposes.

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PORTS

KPA’s port development agenda impresses International investors “The port has seen a continued growth in container traffic and overall throughput. Over the last three years, the Port has consistently handled over one million TEUs thus enabling Mombasa to feature in the global map of top container Ports.

M

ore than 100 international investors on a public–private business mission to Kenya have expressed satisfaction with the ongoing transformation of the port of Mombasa. The investors drawn from Japan, India, France and the United Kingdom visited the port on and were received by the Managing Director Ms. Catherine Mturi Wairi at Bandari College. The MD took the investors through a presentation on the development journey of the port over the years from a traditional small harbor facility to a modern international port. “I am glad to note that for the last ten years or so the Kenya Ports Authority has initiated and implemented development programmes geared towards making the port of Mombasa stand out among the well performing ports globally,” said the managing director. The MD explained to the visitors the key projects being undertaken at the port including the development of the second phase of the Second Container Terminal, facilitating development of Free Trade Zones near the Port, beefing up security, further dredging of the channel to accommodate bigger ships and the development of a second commercial sea port at Lamu as some of the initiatives aimed to improving efficiency and serve the regional economies. “The port has seen a continued growth in container traffic and overall throughput. Over the last three years, the Port has consistently handled over one million TEUs thus enabling Mombasa to feature in the global map of top container Ports. Last year, the port handled 1.091 million TEUs and the overall throughput grew by 2.4 per cent to post a bestever performance of 27.36 million tons, against a backdrop of slower than expected global and regional economic growth,” she added. Mrs. Mturi- Wairi highlighted acquisition of the state of the art marine and cargo handling equipment, development and implementation of a comprehensive ICT strategy, increased customer service orientation through regular stakeholder meetings, introduction of 24/7 working schedule and involvement of private sector in some of the operations as some of the efforts the Authority had put in place to enhance efficiency.

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A section of the investors follow the proceedings of the meeting According to the Business Mission Leader Mr. Selji Okada, Deputy Director General African Affairs Department, Middle Eastern and African Affairs Bureau and International Cooperation Bureau, Ministry of Foreign Affairs, the mission had 48 companies from Japan, 10 from India, nine from France and five from the UK. Okada expressed contentment on the commitment by the Kenya Government in infrastructural development citing the access roads at the Port of Mombasa as an example. He said the investors’ visit is a follow-up of the bilateral agreement between Kenya and Japan during the Sixth Tokyo International Conference on African Development (TICAD VI) for the development of the Special Economic Zones in Mombasa (Dongo Kundu). “During the meeting one of the issues discussed was diversifying the economy of Africa – how to work with the private sector for the development of Africa. We are working with the private sector on how to implement the agreement,” Okada said. He described the visit as a very important step forward noting the public sector both from the Japan and Kenyan side need to do a number of things including listening to the private sector on how to develop the Special Economic Zones. Japanese Ambassador to Kenya H.E Toshitsugu Uesawa, High Commissioner of India Her Excellency, Suchitra Durai, Economic Advisor Office of the President Dr. Eric Aligula , County Government of Mombasa Director of Investment Ms. Swabra Abdulrahaman and the Chairman Kenya National Chamber of Commerce and Industry (Mombasa Chapter) Mr. James Mureu were present during the meeting. The KPA Managing Director was accompanied by General Managers Eng. Joseph Atonga (Engineering Services), Mr. Sudi Mwasinago (Operations) and Mr. Edward Kamau (Corporate Services).

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PORTS

Managing Director urges KPA staff to promote safety "Safety management in ports and elsewhere inevitably means changing human behavior, to develop deep interest and desire to embrace safety in everything we do. I have learnt that safety is not just reflector, boots and helmets. It is in one's mind â&#x20AC;&#x201C; it is your conviction in doing right things right,"

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Managing Director Mrs. Catherine Mturi -Wairi inspects a guard of honour mounted by the KPA Security

enya Ports Authority (KPA) Managing Director Mrs. Catherine Mturi-Wairi is urging her staff to prioritise safety at the workplace through proactive approaches. Speaking on during a colorful closing ceremony of the Safety Week at the KPA headquarters, the Managing Director said putting safety first would help to prevent accidents and unnecessary damage to property at the port. "There is clear evidence everywhere in the world that prevention is better than cure. At the Kenya Ports Authority, we are very much aware of this and therefore seek to protect workers, port users, visitors and the environment by preventing major accidents through proactive approaches," said the MD. Mrs. Wairi further observed that all those who work in ports need to recognise the close interdependence of productivity and safety and health at work noting that at KPA that was a fact well known. "That is why we have an elaborate Occupational Health and Safety Policy together with the Green Port Policy as confirmation of our commitment to Health, Safety and Environment." She added that through experience it has been proved that improvements in safety for workers through effective loss control practices can be finan-

cially rewarding to an organisations and subsequently the benefits could be spread to other stakeholders. The MD at the same time hastened to emphasize on the urgency for change in ports saying it was overwhelming since ports are generally high risk environments considering the nature and types of cargo handled. "Safety management in ports and elsewhere inevitably means changing human behavior, to develop deep interest and desire to embrace safety in everything we do. I have learnt that safety is not just reflector, boots and helmets. It is in one's mind â&#x20AC;&#x201C; it is your conviction in doing right things right," she added. Others who spoke during the function include Mr Mutuku Nzioki, a representative of the National Transport and Safety Authority (NTSA), Captain Muli, representative of the Director General, Kenya Maritime Authority (KMA), Caroline Sambalo representative of the Dock Workers Union Secretary General, Mr. Julius Maghanga, Principal Safety Officer, Eng. Javan Wanga, Chairman Safety Sub Committee and Dr. Gome Lenga, the Chairman Workplace Health and Safety Sub Committee. The event featured entertainment by KPA Taarab Group, security parade and a short skit by KPA Peer educators, Port Fire Brigade and KPA First Aiders.

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AVIATION ROUNDUP

Renewed hopes for the pride of Africa-KQ

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enya Airways cuts losses by 51 percent to 10.2Bn to hit Sh10.2 billion in 2017 compared to the Sh26 billion it recorded in 2016, as turnaround strategy takes off. “The turnaround strategy the airline has been implementing in the last one and a half years has started to bear fruit resulting in better performance,” says KQ Chief Executive Mbuvi Ngunze, Passenger numbers went up by 5.4 percent, to 4.5 million customers the highest the airline has ever had while cabin factor went up by 4 percent. The turnover went down by 8.5 percent to Sh106 billion compared to Sh116 billion in 2016, while net finance cost went up by Sh4.1 percent to Sh7.3 billion from Sh7 billion. The foreign exchange losses that hit Sh4 billion also impaired the airline due to the devaluation of currencies in Sudan and Nigeria during the period under review, however, this was a 62 percent decline from Sh10 billion loss in 2016. Fuel costs declined by 2.5 percent to Sh23 billion while operating costs went down by 3.7 percent to Sh41 billion.

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Moving forward the firm is focusing on financial restructuring and senior management improvements. Michael Joseph is KQ Chairman, “We are working on increasing new staff at the senior management level to help with the turnaround. We are also planning to renegotiate our debt repayment with our finance partners so that we can pay our debt over a longer period” The airline is also planning to add 20 new frequencies in Africa. KQ earlier appointed a Polish National Sebastian Mikosz as the new Managing Director effective June 1, 2017 to replace Mbuvi Ngunze who was set to leave in the first quarter of 2017 following two years of loss making at the airline. Last year Dennis Awori resigned as Chairman of the Board of Kenya Airways and as director of the company after the Kenya Airline Pilots Association (KALPA) pushed for a management makeover of the company. KALPA had threatened to strike if both Awori and Ngunze did not resign but later called it off on October 17, 2016 after a deal with the management on leadership changes after a loss of close to Sh50 billion within two financial years.

Mbuvi Ngunze

“We are working on increasing new staff at the senior management level to help with the turnaround. We are also planning to renegotiate our debt repayment with our finance partners so that we can pay our debt over a longer period”

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, Nairobi - Kenya

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Procurement and Logistics Magazine June 2017  
Procurement and Logistics Magazine June 2017  
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