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The White Elephant, Cargo Failure Casts Doubts on SGR Viability

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SGR Cargo Train.

At the outset, the government had planned to haul 4,000 tonnes per trip in SGR, peaking at 16,000 tonnes daily; 106,000 tonnes weekly and 5.5 million tonnes annually to break even and repay its construction and operational costs.

But, at the current 12,452 tonnes per week, the SGR will have hauled on average, a mere 647,504 tonnes by the end of the year, casting doubt on the viability of the project. For a project that was sold as a revolution to cargo transport in Kenya, it has failed to meet the flashy expectations which is a real big worry given the huge loan debt it came with. The old train used to carry up to 30 containers, but now the new train can carry 216. Four trains would operate daily and government on its conception said they intended to increase these to eight.

Reality is now downing that SGR must have misdiagnosed as it is yet to attract enough transporters to sustain the project. Before the launch of the service in January, the government had indicated that four freight trains would run daily with a future outlook of eight daily far-reaching each carrying 216 TEUs.

This would mean that on each day, the ICD would receive a minimum of 800 TEUs, making 5,600 TEUs weekly and 291,200 TEUs annually. But the train hit its highest number of more than 600 TEUs mid-February, one-tenth of the envisioned capacity.

Faced with the harsh reality that this thing is not working, Kenya Railways gave incentives that would attract more importers to opt fir SGR but this is yet to level up. SGR is struggling to find importers willing to use its services and KPA is forced to make drastic price cuts to lure users. Costs are down to Sh.12,240 from Sh. 16,000 for a 40-foot container.

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This government also had given a directive for goods destined for Nairobi and beyond to be transferred and cleared at Inland Container Deport in Nairobi. Forget the fact that Kenya is a free market and exporters should be at liberty to decide on how and which mode of transport that feel is profitable enough for their business models, now its mandatory to use SGR.

It is turning out that KPA lacks capacity at the ICD and the order to transfer all cargo there was rescinded after cargo had incurred storage charges at the port because of the delay in the clearance at the ICD and the transfer from Mombasa to Nairobi. The ripple effect of moving Mombasa to Nairobi is far reaching but mostly is the fact that it will kill the truck business which is a major source of income to communities living along Mombasa-Nairobi route.

For importers who are the key targets and life savior for SGR, the cargo system is not working at all for them, at least for now. Implementation of SGR was hurried in panic and in the event, it has disorganized importers and the Port staff alike. Existing failures begs the question whether a feasibility test was carried out and whether recommendations were adhered to. One thing that is evidently clear is this project was conceptualized for the good of tenderpreneurs who stood benefiting more from the bloated budget of Sh327B instead of recommended Sh16B. In it’s implementation, Mwananchi was not factored in and that’s why the reality is now biting.

Exporters are complaining that there are many hidden costs which make it more expensive to use the train for cargo compared to the trucks. Trucks get your cargo from the port/CFS and they take straight to your premises and take back the empty container to the assigned yard, at no extra fee. Whereas with the SGR must shunt the cargo from the ICD to your premises and bring back the empty to Msa by SGR at USD 100

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Hidden charges in this are as follows; USD 100 verification at the ICD. Repatriation of the empty container back to Mombasa costs USD 100 paid to SGR back to the port and USD 40 charged onward to the designated empty yards which have always been catered by the transporters. Haunting of the cargo from the ICD to the premises of the cargo owner and the empty back to SGR

In Nairobi, facilities available lacks the capacity to handle large cargo volumes as it has been evident in the last two months, officials are less and they blackmail the importers with the need for bribes before the release of the cargo hence the delay. Government’s directive was to clear cargo within 6 hours. ICD delay and bottlenecks take 5 days to clear now.

Coming from all the extra costs incurred by cargo owners, it is pretty obvious they’ll pass the cost to consumers who’ll, unfortunately, bare the wrath of this logistical mess up. The new developments are also set to make changes in the freight industry and mostly the trucking business which feeds most people in the key Mombasa-Nairobi route. You can most certainly say the thinkers of this project and those who decided to force Nairobi as the central point for cargo clearance, didn’t factor in the ripple effect it would have on the many families living along Mombasa-Nairobi route and depend on the trucking business to make a living. Where will they go next? A convenient model would have both railway and road working for everyone and no one left injured but that’s not the likely case with the ICD directive.

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People have invested in state of the art gas stations along the Nairobi Highway for example which will be idle. The abrupt and arbitrary decision to transfer things to ICD will discourage trade because of the uncertainties its coming with. CFS’ have laid staff due to uncertainty in the industry, the ripple effect felt by the suppliers, transporters.

Private CFS give waivers on rent accrued whereas the beaurecracy at KPA makes it hard for importers. There is a committee at the commercial office that must sit for one to be given a waiver and by the time they sit the charges have gone up. On behalf of the importer, CFS’ inspect container damages and seal discrepancies at the port and engage a surveyor before transfer. Procedure stipulates cargo to be inspected at the port in case of anomaly and engage surveyor and other stake holders failure to which claims will not be honored.

Evidently, the current model proposed by SGR is not working out as it’s more of loss making than profit making. There’s There’s need for government to sit down with importers and factor in their grievances instead of giving this an ostrich treatment. Most important is, as a free market, the government must not curtail, coerce importers to use SGR instead leave them at liberty to choose their best working model.


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Henley Index: The Kenyan Passport Is Now The Strongest In The Region With 71 Countries You Can Visit Without A Visa

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New generations Kenyan passport.

For some people, a passport is a portal to the world. For others, it is a barrier to the travel freedom they seek.

According to the Henley Passport Index, which is the most rigorous and sophisticated measure of global access, Kenyan passport has been ranked the 73rd most powerful powerful in the world with 71 destinations listed that you can visit without a visa or issued with a visa on arrival.

The Henley Passport Index is the only passport index that is based on IATA data, enhanced by extensive in-house research, supported by expert commentary, and updated regularly throughout the year, making it the most robust, credible, and reliable index of its kind.

Kenya which is still the strongest passport in the East African region, has however dropped in rankings compared to 2017 where it was at 68th now down by 4 points to 73 a significant drop.

South Africa holds the 3rd strongest passport in Africa at position 52 globally with 102 visa free destinations. Nigeria is at 94th with only 47 destinations.

Kenya has the 6th most powerful passport in Africa after Seychelles which is 25th with 152 destinations, Mauritius, 31st with 146 destinations, South Africa and Namibia which is at 69 with 79 visa free destinations.

Regionally, Kenya is the strongest with Tanzania coming right after at position 74 with 68 visa free destinations. Uganda, 77th with 64 destinations. Rwanda at 87th with 54 destinations.

Chart indicating Kenya’s performance over the years.

Japan has overtaken Singapore to claim the top spot on the 2018 Henley Passport Index, having gained visa-free access to Myanmar earlier this month. Japan now enjoys visa-free/visa-on-arrival access to 190 destinations, compared to Singapore’s total of 189. Japan and Singapore have been neck and neck on the index since they both climbed to 1st place in February — following a visa-exemption from Uzbekistan — and pushed Germany down to 2nd place for the first time since 2014.

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This quarter, Germany has fallen further to 3rdplace, which it now shares with South Korea and France. France moved up from 4th to 3rdplace last Friday when it gained visa-free access to Uzbekistan, while South Korea moved from 4th to 3rd place on 1 October when it gained visa-free access to Myanmar. Germany, France, and South Korea all have a visa-free/visa-on-arrival score of 188. Iraq and Afghanistan continue to hold the bottom (106th) spot of the Henley Passport Index, with only 30 destinations accessible to their citizens.

The US and the UK, both with 186 destinations, have also slid down one spot — from 4th to 5th place — with neither having gained access to any new jurisdictions since the start of 2018. With stagnant outbound visa activity compared to Asian high-performers such as Japan, Singapore, and South Korea, it seems increasingly unlikely that the US and the UK will regain the number 1 spot they jointly held in 2015.

Countries that you can visit with a Kenyan passport without a visa or be issued with one on arrival can be accessed here:

Asia: Cambodia, Laos, Macao(SAR China), Maldives, Nepal, Timor-Leste.

Africa: Benin, Burkina Faso, Cape Verde Islands, Comores Islands, Congo, Djibouti, Guinea-Bissau, Madagascar, Mauritania, Mozambique, Seychelles, Nigeria, Sierra Leone, Somalia, South Sudan, Sudan and Togo.

Oceania: Palau Islands, Samoa And Tuvalu.

St. Lucia

Americas: Bolivia

Middle-East: Iran and Jordan.

This list mutates so you have to check with your travel agent.

For several years, the South African passport has remained the third strongest on the continent in terms of its levels of access, with Lrst and second place held by the Seychelles and Mauritius, respectively.

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Both islands continue to outperform their continental counterparts due to their maintenance of prized visa-waiver agreements with Schengen countries as well as their own relatively open visa policies, which have generally been reciprocated.

The Seychelles, which renders itself a completely visa-free destination, secured further deregulated visa access for its passport-holders through visa waivers from the governments of Thailand and Angola in the Lrst quarter of 2018. Similarly, Mauritius, which is visa-free for all but 16 countries, secured a visa-waiver agreement with New Zealand in April 2018.

Although the rest of Africa continues to lag behind in the accessibility of their passports, there is reason for optimism. While visa-free access outside of the continent is still limited, African states are increasingly deregulating visa regulations for their continental counterparts.

A case in point is Angola, which recently removed visa requirements for nine African countries: namely, Lesotho, Madagascar, Malawi, Cabo Verde, São Tomé and Príncipe, Morocco, Swaziland, Algeria, and Zambia. Similarly, the undertaking of the Central African Economic and Monetary Community to grant visa waivers to passport-holders of its member states (Cameroon, Equatorial Guinea, Central Africa Republic, Congo- Brazzaville, Gabon, and Chad) could also be replicated by other regional political blocs seeking to promote the African Union’s vision of increasing inter-African trade and travel, as outlined in its Agenda 2063 mandate.


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Mombasa County Launches Open Roof Double Decker Sightseeing Busses As Joho’s Goverment Strives To Boost The Tourism Industry

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The launched double decker bus.

Trade, Tourism and Investment CECM Hon. Fawz Rashid officially launched the Mombasa Sightseeing Bus at the Tusks earlier today. Among those present during the launch were Archbishop Martin Kivuva, Mombasa County Chief Officer Mr. Innocent Mugabe, Tourism Finance Corporation MD Mr. Jonah Orumoi, Proul-Mombasa Sightseeing Bus Limited acting CEO Ms. Evelyn Lelle, Kenya Association for Hotel Keepers and Caterers CEO Mr. Sammy Ikwaye and Kenya Coast Tourist Association CEO Mr. Julius Owino.

The bus

The introduction of the double-decker sightseeing buses to Mombasa’s tourism scene is a major milestone towards elevating our tourism industry and building the infrastructure for sustainable tourism success.

This service addresses a gap in the sector that exists today, whilst also making Mombasa more appealing as a leisure destination to tourists. These tours will be one of the best ways for visitors in Mombasa to get acquainted with all that this unique city has to offer.

The county government of Mombasa will work hand in hand with the management of the sightseeing buses to put a facelift at the various stopping points to give tourists the opportunity to have quality interactions with our rich history and culture through sampling of our local cuisines, shopping for our traditional souvenirs and taking part in our local dances and music.

A ride on the bus giving such a view.

This will also loop in our youth and women into the tourism value chain as they provide these lasting memories to our visitors. This sightseeing bus should not only offer a fantastic service for tourists coming to Mombasa but for people living or working in or around Mombasa who might have a couple of hours to spare, or friends and relatives visiting from out of town.

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The open roof double decker bus will allow tourists to hop-on and hop-off as much as they like at any of the bus stops on the route and see all the best sights and attractions that Mombasa city has to offer.


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Cytonn’s Quarterly Company And Market Update Gives New Economy Outlook And Exciting Opportunity For Investors

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Cytonn CEO Edwin Dande

https://crm.cytonn.com/events/weekly_real_estate_site_visit

On 29th September 2018, Cytonn held its Company, Markets & Projects Updates Event for Quarter 3. The quarterly forums enable the company to provide updates to investors on our outlook of the economy and attractive investment opportunities, while also addressing any questions clients may have pertaining to their investment with Cytonn.

The event was held at The Alma, a comprehensive residential development in Ruaka by Cytonn Real Estate. Investors present also had the chance to inspect the progress of The Alma which is currently 67.0% complete, and visit the show houses for the 1, 2 & 3 bedroom units.

Speaking during the forum, John Ndua, Cytonn’s Investment Associate presented Kenya’s economic review, highlighting the various areas that will shape economic growth in 2018. “We maintain our positive outlook on the 2018 macroeconomic environment, supported by Agriculture, Real Estate, Construction, together with accommodation and food services”, noted Ndua.

Victoria Wanyanga, Cytonn’s Project Management Assistant updated on the progress of the various projects by Cytonn Real Estate. These projects include the Amara Ridge, which is 100% complete with all units sold, and The Alma which is 67.0% complete with hand-over of the 1st phase expected in Quarter 1, 2019, among others.

Grace Weru, Cytonn’s Finance and Administration Manager, gave important updates regarding the Cytonn High Yield Solutions (CHYS), an investment product by Cytonn Investments. Grace highlighted the governance structure of CHYS, noting that assets under management had grown from Kshs. 7.6 billion in December 2017 to Kshs. 10.3 billion as at September 2018.

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Faith Maina, Investment Analyst at Cytonn Investments, presented the actionable investment opportunities, noting that there are three broad ways through which one can invest in real estate. These are equities, mezzanines and project notes. “Project Notes are used to finance real estate developments, and allow all investors access to attractive real estate returns, that would not necessarily be available in the public domain’’, said Faith.

Cytonn Investments, noted that the main reason the company holds such events at their real estate developments is to boost investor confidence and show them the progress of the projects. Edwin, also explained in detail the dispute that part of the Senior Management of Cytonn Investments are involved in with their former employer, Britam, assuring the investors that there was no foul play from their part, and urging them to maintain their confidence in the company.

He also led the Q & A session, where client questions were addressed by Senior Management.


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