Kenya scores poorly in global and EA logistics survey

Geza Ulole

Geza Ulole

JF-Expert Member
Oct 31, 2009
Geza Ulole

Geza Ulole

JF-Expert Member
Joined Oct 31, 2009
16,632 8,936 280
Kenya scores poorly in global logistics survey
Posted Thursday, January 14 2010 at 19:27

High transport costs coupled with delays along key highway corridors and the port of Mombasa continue to weigh down Kenya's global trade profile with a latest survey by the World Bank ranking the country the worst among its EAC partners in terms of logistics performance.
Such performance is considered a drawback to trade flow because importers and exporters incur extra costs as a result of the need to mitigate the effects of unreliable supply chains.
"World trade is moved between countries by a network of increasingly global logistics operators. But the ease with which traders can use this network to connect with international markets depends in large part on country-specific factors such as trade procedures, transport and telecommunications infrastructure and the domestic market for support services," the World Bank says in a report released yesterday and titled; Connecting to Compete 2010.
According to findings from the survey Kenya was ranked 99th overall behind its main EAC partners Uganda and Tanzania who managed positions 66 and 95 respectively based on a special logistics performance index (LPI). In the survey Kenya posted a score of 2.59 points compared to the 2.82 and 2.60 points realised by Uganda and Tanzania respectively.
Germany and Singapore received the highest ratings in the 2010 LPI with scores over 4.08, while Somalia ranks last with 1.34 points.
The LPI is a multidimensional assessment of logistics performance, rated on a scale from one (worst) to five (best). It uses more than 5,000 individual country assessments made by nearly 1,000 international freight forwarders to compare the trade logistics profiles of 155 countries.
"The importance of efficient logistics for trade and growth is now widely acknowledged. Analysis based on the 2007 LPI or similar information has shown that better logistics performance is strongly associated with trade expansion, export diversification, ability to attract foreign direct investments, and economic growth," the World Bank said.
The World Bank termed Uganda performance as a rare case that showed how facilitation efforts by landlocked countries may almost eliminate such handicaps.
"Uganda is the third best performing low-income country in the entire sample, even doing better than its transit country Kenya. Uganda's story is closely related to successful ongoing regional integration efforts with neighbouring countries and trade logistics and facilitation projects supported by the World Bank Group and a number of international donors and development agencies," the institution said.
It points out the Malaba project, located at the border of Kenya and Uganda and one of the busiest border posts in the region as key to Uganda's improved logistics performance.
Local exporters agree with the World Bank's findings and say logistical services in region remain wanting despite ongoing efforts to open up economies to outside trade.
"There is a serious challenge in terms of logistics in the region resulting in unreliable delivery of produce. About $100 million is lost annually from the coffee business alone because the longer coffee stays in a shipment containers the more the depreciation in value," Mr Philip Gitao, the executive director of the East African Fine Coffees Association (EAFCA) told a media briefing on Wednesday.
Past research by the World Bank has revealed that congestion and delays at the Port of Mombasa, poor roads and delays at weighbridges have been the main undoing for Kenya's logistics performance.
Delays at the port or in transit add to the shipping time and the processing in the country of origin. However unpredictability of the lead time is potentially more damaging than delays, especially for manufacturers. It also dramatically increases the cost of inventories.
Players in the Kenyan textile industry have particularly been hard hit by this problem because of the lengthy nature of their supply chain where they have to source for raw material and export finished products to far flung markets.
Most of the garments made in Kenya are produced from non African fabrics purchased as far as in India or China. This means that Kenyan garment manufacturers need to import and wait for the fabric's arrival to start production and this increases their turnaround time.
Increase quality
In addition, lack of dying plants, mills and production of other garment parts including zippers and labels also increase the order cycles. By contrast, direct competitors in China are integrated garment factories where the process starts from raw cotton and ends with the final trousers or shirts, all done in the same factory.
"The difference in turnaround times between Kenya and China is striking. The order cycles for Kenyan textile companies are around 150 days. This cycle is very long compared to a 60 day cycle for China," the World Bank said in a past report on Kenya's logistics performance.
In its Connecting to Compete 2010 report, the World Bank argued that liberalising logistics services markets would for example, encourage local service providers to increase quality and price competitively.
"This is particularly important in sectors such as trucking and customs brokerage that are essential to efficient service delivery by international forwarders," it said.
The survey pointed out that the performance of agencies responsible for enforcement of sanitary and phytosanitary regulation - and to a lesser extent other types of product standards - appeared to lag behind customs in many countries with LPI survey respondents rating the activities of such agencies as a major factor leading to additional paperwork and inspection processes in the lowest performing countries.
"A major challenge for the international community is how to help the lowest performing countries benefit from an increasingly open global trading system. These countries need to make substantial improvements in logistics competence, processes, and business practices, which may be difficult to attain given numerous other priorities," the report stated.

Kuna mjinga mmoja wa Kikenya uups a Kikuyu alikuwa anawika in this forum here is WB resport. Suprizingly the same Nation Media is the architect of the propaganda we see on glorification of Kenya!

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