DAR ES SALAAM Port has recently been investing heavily in infrastructure and other projects to enhance its efficiency. The facility has, however, been experiencing massive decline in transit cargo traffic in recent months.
The reasons for the decline range from the country’s introduction of Value Added Tax (VAT) on transit goods, dilapidated railway infrastructure, South Africa Rand’s depreciation to distorted media reports. “Though VAT is yet to be enforced, it has scared importers to the extent they are using alternative ports in the region,” said Dar es Salaam Port Acting Manager, Mr Hebel Mhanga, during a media seminar on Friday. VAT was supposed to start in 2015/16 fiscal year.
However, Tanzania Revenue Authority (TRA) has yet to impose the law but its spiral effect has sprung to the entire Dar port users. The VAT on transit cargo had surfaced in late 1990s but the port stakeholders managed to talk it out from passing into a law. However, this time around it resurfaced and was passed as a law despite the outcry from the stakeholders who were against it.Mr Mhanga said, for instance, Zambia’s total cargo traffic through Tanzanian Port in the first two months of this year, slumped by 47.6 per cent, which are 121 transit passages in comparison to the same period last year. Economic analysts attribute the decline to the competitors not charging the VAT on transit goods.
Furthermore, they offer consumers greater value through lower prices and provide other benefits. The acting port manager said the Rand’s depreciation has enabled port users to use fewer dollars when purchasing rand thus lowering their business costs, hence attracting businesspersons to import through Durban port in South Africa. Mr Mhanga said; “The export traffic, especially copper from Zambia might decline further as most of the agreements are coming to an end.
“These mining firms are likely to use ports in the neighbouring countries which do not impose VAT on transit goods, despite heavy negotiation, unless the VAT is scrapped off the books.’’ Meanwhile, Zambia export traffic through the Dar es Salaam port has deteriorated; going down by 5.9 per cent between January and February, this year.
“We expected that the DR Congo traffic through our port will overtake Zambia this year. Our expectations have been defeated by VAT,” Mr Mhanga pointed out. However, he said the DRC cargo also decreased due to the introduction of single custom territory as it works against Congolese traders who enjoyed negotiating taxes with their authorities. DR Congo’s import traffic went down by 19.7 per cent while that of export dropped by 13.3 per cent between January and February against the same period last year.
“To DRC, the single custom was plus as it maximised tax collection. But for traders, it translates to profit loss … they have now opted to use other ports in the region … and as a result we have lost 50 per cent of business,” Mr Mhanga said.
In another development, during the same period Dar Port has lost 78.2 per cent of Uganda business and 36.4 per cent of Malawi business as well. Malawi decided to use Beira Port in Mozambique, which in recently days has been well connected by a standard gauge railway to reduce transit time to two days and more cheaply compared to Dar route.
The Tanzania Port Authority’s Director of Marketing, Ms Francisca Muindi, said Dar Port is currently facing a cut throat competition from other ports in southern Africa and need to strengthen its railway infrastructure to win back business.
“For instance, Zambia traffic, mainly copper, went down from 65 to 15 per cent…railway transport less than one per cent,” Ms Muindi said. She said Tanroad regulation to bar link-trailers to travel on Tanzania roads has worsened the matter further.
Most of copper miners use these link-trailers to transport copper. Mr Gladson Urioh from the TPA Planning and Investment Directorate said expansion of the port was of paramount importance to boost traffic clearance efficiency.
“Strengthening of Berths 1 to 7 starts at the end of this year, including the dredging of the channel to allow big ships to dock at the port,” Mr Urioh said. The dredging project, to be implemented using World Bank and TPA funds to the tune of almost 690 million US dollars, will also include increasing the depth of Berths 1 to 7, starting May.
According to the TPA’s Port Master Plan 2009-2028 has the expansion and investment gap of 10 years, thus warranting congestion at the port. The port, projected to receive 1.2 TEUs by 2019, currently takes in some 600,000TEUs.
The construction of berths 12, 13 and 14 has received funds from the WB, DFID and TPA. Removal of the current Kurasini Oil Jetty (KOJ) to Mbwamaji in Kigamboni is among the fund’s components.