Households are bracing for higher commodity prices following the increase in the Railway Development Levy (RDL) from 1.5% to 2%, compounded by port congestion at Mombasa leading to shipping surcharges.
The revised RDL, effective December 27, 2024, was introduced through the Tax Laws (Amendment) Bill 2024, signed by President William Ruto on December 11. The levy applies to all goods imported for home use, with funds earmarked for Standard Gauge Railway construction.
Shippers and traders warn that the increased levy will raise consumer costs, as Kenya remains heavily dependent on imports. Agayo Ogambi, CEO of the Shippers Council of Eastern Africa, has called for reduced levies like the Import Declaration Fees (IDF) and corporate tax to ease the burden on businesses.
Compounding the issue, congestion at Mombasa port has prompted shipping lines like Mediterranean Shipping Company (MSC) to impose a Congestion Surcharge (CGS) of $500 per container from the Middle East and the Indian subcontinent starting January 13, 2025. MSC handles 18.9% of Mombasa’s container volumes.
Further challenges include increased freight costs due to Red Sea instability caused by Houthi rebel attacks. Many ships are now rerouting around the Cape of Good Hope, extending transit times and raising shipping and insurance costs. These disruptions affect not only imports but also Kenya’s exports.
Ogambi urged the Kenya Ports Authority (KPA) to address port congestion issues and MSC to reconsider the surcharge, emphasizing that infrastructure growth should not come at the expense of already strained businesses and consumers.
