Document of The World Bank Public Disclosure Authorized

Report No. 26444-KE Public Disclosure Authorized KENYA

TRANSPORT SECTOR MEMORANDUM Public Disclosure Authorized VOLUME III Public Disclosure Authorized

KENYA

TRANSPORT SECTOR MEMORANDUM

Volume 3

ANNEXES

ii

TABLE OF CONTENTS

Pages ANNEX 1: Kenya Main Road Network 1. Introduction 1 2. Survey Background 1 3. Road Service Standards: Main Paved Network 2 4. Road Conditions: Main Paved Network 4 5. Traffic Flows: Main Paved Network 5 6. Engineering Assessment: Main Paved Network 5 7. On-Going Engineering Activities 8 8. The Unpaved Road Network 9 9. Road Categories for Maintenance and Intervention Planning 11 10. District Perspectives 11 Annex A: Vehicle Speeds 15 Annex B: Kenya Traffic 17

ANNEX 2: Port of Mombasa: Cargo Clearance 1. Export Clearance 18 2. Import Clearance 19 3. Transit Procedures 23 4. Informal Payments and Streamlining Clearance 23

ANNEX 3" Civil Aviation 1. Kenya Airways: Key Operating Statistics 25 2. Finances 26 3. International Scheduled Services: Foreign Carriers 27 4. Principal Airports: Physical Characteristics 28 5. Minor Airports 29 6. Air Transport: Commercial Aircrafts 30

This Transport Sector Memorandum was prepared on the basis of missions in November, 2001 and mid- 2002, by Mr. Simon Thomas (Senior Transport Economist) in collaboration with Mr. Josphat Sasia (Operations Officer, AFTTR), Mr. David Rudge (Senior Road Engineer, AFTTR), Mr. Yash Pal Kedia (Principal Railways Engineer, AFTTR), Mr. John King (Aviation Consultant) and Mr. Paul Thompson (Port Consultant). The Road Sector Review was undertaken with the active participation and support of the DFID, EU, KfW and SIDA. The views and recommendations contained in the Transport Sector Memorandum are those of the review team and are not necessarily endorsed by the Management of the World Bank

ANNEX 1 KENYA MAIN ROAD NETWORK

Review of Present Status and Conditions

1. Introduction

This report summarizes the results and conclusions of a survey of the main classified road network, undertaken by a World Bank team, accompanied for part of the time by MORPW engineers, in early November, 2001. There is little up-to-date quantitative information available on the overall condition of the Kenyan road network, the last comprehensive survey was undertaken in the late 1980s. Two rather divergent views have emerged recently: one suggesting that road conditions are rapidly deteriorating and are now proving a major constraint to economic development, the other suggesting that there has been some improvement to the condition of the network. As road users tend to operate over a rather restricted parts of the network, the views may not necessarily be inconsistent as the road users' perception may depend upon which particular roads they use. The World Bank transport team, for example, has for several years concentrated on the Nairobi - Mombasa road and has traveled relatively little outside this corridor.

The survey is a component of the on-going sector work directed toward the development of a strategy for the main road sector in Kenya and this report highlights present conditions and constraints in the sector. A number of core issues in the sector are raised but not resolved. These issues will be addressed in the main report of the sector work which is expected to be circulated by the end of May, 2002, following more extensive discussions in Kenya with the Government, Kenya Roads Board and other key stakeholders in the sector.

2. Survey Background

This survey was intended to provide a very rapid assessment of present road conditions, the level of service provided to road users, and the engineering needs of the network. The survey is not intended as a substitute for the detailed inventory and condition survey of the classified road network which is now being undertaken by consultants financed under the Nairobi - Mombasa Road Rehabilitation Project; the inventory survey will provide a far more comprehensive assessment of the network and its needs. Unfortunately, the results of the full condition survey will not be available for another 12 months, and an indication of network conditions is needed to guide the formulation of proposals for a revised road sector strategy.

The survey covered approximately 3,350 kms of the most densely trafficked main paved road network (A, B and C roads) and another 550 kms of unpaved roads (B, C and D roads). The roads surveyed are indicated on the accompanying map. The survey thus includes a very large proportion of the main road network (excluding the more lightly trafficked roads in North and North-Eastern Kenya) and the most densely trafficked paved roads, but the sample of unpaved roads is too small to draw any general conclusions. 2

For most roads surveyed, moving observer vehicle counts and vehicle speeds were recorded, as well as road conditions, to provide indications of traffic flows and operating service standards. A team of transport economists traveled about 80% of the sample, and approximately 50% of the roads were traveled by a road engineer; some roads were thus surveyed by both the economists and the engineer (on these roads there was reasonable agreement regarding conditions). The World Bank team was accompanied on most of its trips by engineers from the Ministry of Roads and Public Works. The assistance, knowledge and advice of these engineers was invaluable to the team.

The survey team also took the opportunity to meet with a number of District Road Engineers to obtain an insight into what is actually happening in the districts and the impact of the recent changes in the organization and financing of the road sector on district operations. This was felt to be useful as much of the World Bank's interaction with the road sector has necessarily been Nairobi focused with the MORPW HQ.

For the main road network, the results of the survey may not be definitive, but are certainly more than illustrative. The following sections provide a very condensed summary of the results of the survey. The detailed results are provided in the annexes to this report.

3. Road Service Standards: Main Paved Network

Road service standards and vehicle operating costs can generally be summarized by vehicle speed and pavement roughness. However, there is also a strong, though not perfect, correlation between pavement roughness and vehicle speed - the higher the roughness, the slower the speed. Road alignment, traffic, urban side-friction, time of travel (day or night), the cause of the pavement roughness (patches, potholes or corrugation), and even the number of speed bumps may also have a very significant impact upon road speed, for example:

Road Section Road Condition Average kph A104 Naivasha - Nakuru Road in bad condition, numerous patches but no 71 potholes

B3 Keumba - Kisii Road in bad condition with numerous potholes 38

B6 Embu - Meru Road in fair/poor condition, a few potholes, but poor 61 vertical and horizontal alignment

However over the network, vehicle speeds provide a reasonable indication of road service conditions. Road conditions from the detailed survey were assessed and compared with the section speeds, Table I. The results quite clearly indicate the strong relationship, but also the relative dispersion of speeds caused by other factors. 3

Table 1: Road Condition and Light Vehicle Speed

Road Condition Mean Average Speed Standard Deviation (kph) (kph) Very bad 41.9 13.4 Bad 56.3 10.8 Poor 67.6 6.8 Fair 78.4 10.7 Good 90.0 10.3

The mean average speed of the survey vehicle was probably slightly lower than for the average Kenyan light vehicle. The driver was instructed to drive conservatively and limit the top speed to about 110 kph. Many drivers of light vehicles clearly exceed this speed on roads with good (and not so good) alignment and pavement conditions. It should be noted that while road service conditions are a guide to the need and urgency for engineering intervention, they are not an infallible guide - many road sections still provide good levels of operating service, while requiring major rehabilitation or reconstruction, for example, the Machakos T.O - Ulu section of the Nairobi - Mombasa road.

The mean average speed, over the 2662 kms of the main road network for which speeds were recorded, was 78.5 kph, very close to the average speed for paved roads in a fair condition. However, the roads in the main road network are not all in a fair condition, but cover a wide spectrum of service standards from very bad to very good. The overall assessment of road user service standards (given that speed is an important element of service standards) on the main paved road network is shown in Table II:

Table II: Kenya Main Paved Road Network: User Service Standards

Service Light Vehicle Speed Percent of the Main Condition (kph) Paved Network Bad 0- 55 8.6 Poor 55 - 75 28.3 Fair 75 - 85 25.4 Good >85 37.7

Overall, approximately 63% of the sampled network provides good or fair service standards and 37% poor or bad levels of service. The proportion of roads in good or fair condition is rather higher than the team expected and it seems unlikely that there has been a very major reduction in service standards compared to the situation in the early 1990s. However, a rather different impression of service standards might have been obtained, if the survey had been conducted only a couple of years ago.

The completion of the IDA financed Mtito Andei - Bachuma Gate section of the Nairobi - Mombasa road has made a significant but modest improvement to the overall network. More important has been a shift in maintenance priorities by the Roads Departtnent. The recent increase in pothole patching on the most important paved routes, though not yet evident on all paved roads, has made a major impact upon average service conditions. Simply patching the potholes has shifted the service standard of many sections of road from bad to poor and from poor to fair. The economic return from the increase in pothole patching on important routes has probably been extremely high, much higher than some of the more comprehensive rehabilitation projects that have been undertaken on less important roads. 4

While overall road service conditions may not have deteriorated dramatically, it is possible that present road network still acts as an important constraint to economic activity. Short sections of very bad service standards along roads with otherwise adequate standards could still act as important constraints. Conceptually, at least, a road network in otherwise good condition might be rendered impassible by a number of extremely short sections (a lack of bridges would be ultimate example). MORPW now appears to be giving priority to the elimination of the important bottlenecks on the network and major improvements in service standards on previously critical sections, such as Maji Ya Chumvi - Miritini, Awasi - Kisumu and Naivasha - Nakuru, were noted. Some bottlenecks still remain, for example, Kisumu - Yala rehabilitation or reconstruction now underway), Mau Summit - Timboroa, and Nanyuki - Isiolo.

4. Road Conditions: Main Paved Network

Road conditions were recorded for about 3350 kms of the paved road network on a section by section basis. Given the time and resources available, it was not possible to undertake a more detailed km by km survey. Moreover, the detailed survey of road conditions is already underway with the inventory analysis and only a broad assessment is now required. The results on the survey are indicated below, in Table Im:

Table mI: Kenya Main Paved Road Network: Road Conditions

Road Condition Kms Percent of Network Very bad 140 4.2 Bad 492 14.9 Poor 555 16.8 Fair 1024 31.0 Good 1092 33.1

The results broadly mirror the service standards, although there is a significantly higher proportion of roads in bad and very bad condition, less roads in poor condition and a reduced proportion of roads in good condition.

The sample of roads surveyed was not, however, randomly selected but intentionally biased toward the main road network carrying the higher traffic flows. If MOPWH has been allocating available maintenance and rehabilitation funding in a rational manner, it might be expected that the network surveyed has received priority. Consequently, the remaining 5,000 km of less trafficked roads may be in a significantly poorer condition. Certainly, many of the low trafficked paved roads surveyed, for example Kisii - Kilgoris, appeared to have received little maintenance funding for several years and potholes either remain unpatched or have been patched temporarily with murram. The neglect of patching was clearly not a short-term phenomenon and on some roads in very bad condition, for example Kisumu - Yala, there is little indication that any potholes have ever been patched.

It must be emphasized that the current service levels and road conditions on the paved roads are not an indicati6n of investment needs. The very extensive patching maintenance effort is merely masking the need for investment to prevent the collapse of many of the many roads which are failing structurally. These roads are beyond normal maintenance and require major rehabilitation or virtual reconstruction 5

5. Traffic Flows: Main Paved Network

Even though the survey was aimed specifically at the maifi paved road network, traffic flows along the network are still relatively light by developed country standards. The flows are high enough, however, to justify the pavement standard (an ADT of 200 - 250 is usually considered the typical benchmark flow to generate a 12% economic rate of return for the upgrading investment). Outside of the Northern Corridor, Mombasa - Nairobi - Malaba and Mau Summit - Kisumu - Busia, the flows on the network are between 500 - 1000 vehicles per day, Table IV.

Table IV: Kenya Main Paved Road Network: Traffic Flows outside the Northern Corridor

Average Daily Traffic Percent of the (ADT) Network 0 - 500 17 500 - 1000 50 1000- 1500 15 1500 - 2000 7 >2000 1 1

Unsurprisingly, all the very heavily trafficked roads are located around the Nairobi urban area. Traffic along the Northern Corridor is significantly higher with flows of 2,000 - 3,000 between Nairobi and Mombasa, 5,000 - 6,000 between Nairobi and Nakuru. However, from Mau Summit to Malaba the flow is reduced to around 1,500 vehicles per day but the proportion of very heavy trucks, truck-trailers and semi-trailers, is very high.

While traffic flows are relatively light, they may be sufficient for major changes in the organizational approach to the sector. The recent Phase I report on the potential for road concessioning in Kenya suggested that, outside the Northern Corridor, there would be little potential for conventional full road concessions, using toll financing. On the other hand, the report also indicated that maintenance concessions using shadow tolls, financed from the fuel levy, could be feasible on roads with an ADT of 500 or higher. If this can be further substantiated, a very large proportion of the main road network could potentially be considered as feasible for maintenance concessions. Considerable capital funding would be required to bring the network of such roads to a condition suitable for long-term concessioning and a hybrid approach would be necessary, blending private and public sector funding.

6. EngineeringAssessment: Main Paved Network

General Comments Overall Situation: The main road network is generally being maintained at a fully trafficable standard, although service standards on a significant part of the network are poor. MORPW has managed to remedy the impact of previous routine maintenance neglect and the El Nino rains and there are no longer the cavernous potholes which used regularly to overturn large truck-trailer and semi-trailer combinations. This is a very considerable achievement for which MORPW should be congratulated. 6

Routine Maintenance: On the most critical sections of the main roads, the force account resealing units are managing to keep up with the demand for pothole patching, even where excessive numbers of potholes are forming as roads deteriorate while awaiting necessary periodic maintenance, rehabilitation or complete reconstruction. But, many potholes and pavement edge failures remain unpatched on less critical links and DREs suggest that they are allocated either no or little funding for anything other than patching the main routes. While there are reports of the increasing use of contractors for routine maintenance, it appears that they are not yet employed for the pothole patching of paved roads.

While a major increase in patching was noted on key links, there is little sign of comprehensive routine maintenance on any of the roads surveyed, with the exception of limited shoulder work on one or two sections. There is an urgent need for ditch cleaning, shoulder repairs, bush clearing, crash barrier repairs, etc on almost all roads, including those on which major works have recently been completed. Pothole patching may provide the greatest short-term benefit but these other routine maintenance activities are still essential, if the initial investments in road construction, improvement and/or rehabilitation are to be sustained. On too many roads the drop from the road pavement to the shoulder is so large that is potentially lethal to road-users. In addition, the edges of the road pavement are being damaged and this will trigger structural failure and the need for even more extensive remedial works. Hopefully, as the burden of the very large overhang of gravelling contracts is removed, more funding can be released for a coherent program of routine maintenance on the main road network.

RehabilitationNeeds: Despite the improvement in service conditions, much of the network is in a critical structural condition and requires major maintenance intervention. In fact, there are relatively few sections of road which do not now require, at the very least, a major maintenance program to overcome the backlog of routine maintenance, together with resealing. Very many sections require full rehabilitation to remedy the base and sub-base failures, while a significant number require full reconstruction. Much has been done but much remains to be done

Fuel Levy Contracts: The survey confirmed that a very considerable number of maintenance contracts have been or are being executed with funding from the Fuel Levy. In general, the quality of the work appears reasonable, given the objectives of the interventions. Unfortunately, though some reconstruction works have been undertaken, the large majority of interventions on the paved network are minimal short- term holding operations, aimed at keeping the road in some form of serviceable condition until a full intervention can be financed. Repair and reseal contracts are thus being executed and planned on sections of the main network which clearly require full reconstruction. On some sections of road, for example Sotik - Amala and Kisumu - Yala, these contracts have proved impossible to implement and the works have been increased to full-scale reconstruction. Inevitably, the change in the scope of the works results in a major shortfall in the funding available under the contract. Under previous MORPW managements, the change in the scope of works would have resulted in very large variation orders (often dwarfing the cost of the original contract). This approach has now been changed and the length of revised works is now being scaled down to the funds available, and the remaining length of the section re-tendered. This seems a very much more transparent procedure and less open to potential abuses.

MORPW Intervention Policy: The Roads Department is now applying the policy of short-term holding interventions, perhaps it should be termed the 'band-aid approach', to the high volume road sections around Nairobi. Bidding documents have been developed for repair and reseal contracts on the A104 Nyayo Stadium to Machakos T.O, the Kabete - Limuru dual carriageway and the Thika dual carriageway. The approach is a pragmatic response to (a) the need to keep a level of serviceability on these important routes; and (b) the limitation in the funds available which prevents the appropriate interventions from being made, without depriving the rest of the main road network of funding. 7

However necessary and rational, as an immediate response to the present predicament, the policy cannot be sustainable in the longer-term: * The repair and reseal interventions will have a very limited life, very probably less than four - five years. They are thus very costly, calculated on an annual basis when compared with the appropriate solution, especially as the interventions will have minimal residual value; * They will provide an inferior level of service to the appropriate solution. They may delay rapidly escalating pavement roughness but will have only a limited impact on existing pavement roughness; * Routine maintenance costs are likely to be high because the basic structural problems of the road have not been rectified. Potholes are likely to re-appear quickly. * They take funding from other roads for which this type of intervention would be entirely appropriate. Many of the older paved roads surveyed need localized patching and resealing as the initial seal is very old and has become brittle, e.g. Voi - Mwatate. Given the shortage of funding available, however, it is likely that these roads will deteriorate further until they eventually need a much more extensive and higher cost intervention. The policy also runs the risk of further damaging the credibility of both the Roads Department and the Kenya Roads Board. Road users will observe major work being undertaken, and will then travel on what appears to be a much improved road. When the road begins to fail within a relatively short space of time, there will almost inevitably be accusations that the funding has either been 'eaten' or diverted to other uses. It may well be necessary, though perhaps difficult, to educate the road user and politician in the nuances of a temporary holding intervention to buy time before the required reconstruction is undertaken.

Specific Comments Paved Shoulders: while the sealing of shoulders has many benefits, it is clear that a careful review is required of the design standards for paved shoulders. The shoulders along the newly reconstructed Mtito Andei - Bachuma Gate section of the Nairobi - Mombasa Road are extensively cracked, as are the shoulders on the Machakos T.O. to Ulu section which was reconstructed in the early 1990s. On many other roads with sealed shoulders, the road is failing at the pavement edge and a continuous pothole is forming along the juncture of the pavement and shoulder. These appear to be design rather than construction defects which need to be analyzed and then addressed in the road design manual.

Road markings: reflective lines at the center and edges of the road pavement are known as a relatively cost-effective road safety measure and, given the extremely high road accident rates in Kenya, should receive high priority. Unfortunately, many road reconstruction/rehabilitation projects seem to run out of funds before the road marking is undertaken. Moreover, several of the road engineers, interviewed within MORPW, do not seem to appreciate the importance of road marking and need to be educated. Where road markings have been placed using locally produced road marking paint, the marking have effectively disappeared within a period of one or at most two years. The use of such paint should be discontinued as ineffective. However, the thermoplastic road marking paint used on the newly constructed Mtito Andei - Bachuma Gate section of the Mombasa road has performed excellently. Though more expensive than the conventional marking paint, the thermoplastic paint could well be a much more cost effective alternative and MORPW should consider including its use as part of its design manual and mandatory on all future road projects. Even a small reduction in the number of road accidents would justify its use and the additional cost. 8

Reflectors: the experimental use of reflectors (the modem equivalent of the old 'cats eyes') on a number of road sections appears to have failed with extensive theft of the reflectors. Design consultants should perhaps be discouraged from the further use of reflectors and rather encouraged to provide for thermoplastic road markings.

Speed Bumps: speed bumps have become almost an epidemic on the road network, both paved and unpaved, in recent years. While not trying to deny the benefits of speed reduction and traffic calming in urban and peri-urban areas, coherent planning and selection of the location and agreed design standards for such works need to be applied. It was observed that speed bumps are resulting in road damage with many of the weaker AC road surfaces becoming heavily rutted around the bumps. Moreover, the road bumps are being constructed without any uniform design or construction standards and vary across the spectrum from reasonable to ridiculous. The number of speed bumps are having a serious impact on road service levels, by reducing vehicle speeds unnecessarily, and are proving a danger to road users as many have no warning or distinctive marking to indicate their presence. If speed bumps are to be allowed, as very probably they should be (given prevailing driving standards), their use should be regulated with the road implementing agency authorizing their use and MORPW defining construction standards together with accompanying warning road signs and road markings.

7. On-Going Engineering Activities on the Main Road Network

Northern Corridor Substantial improvements are either on-going or planned for the Northern Corridor routes, funded by both the fuel levy and donors. Taken together, these activities will have a substantial impact upon important sections of the network: On-going Construction: * Bachuma Gate - Maji Ya Chumvi: repair and overlay almost completed. Funded under the fuel levy. * Kisumu - Yala: a repair and reseal contract has been modified to major rehabilitation and reconstruction. This will mean that either a major variation order will be required to fund the additional works, or the length of works will be reduced and a further contract tendered. Funded under the fuel levy. Planned/FundedConstruction: * Sultan Hamud - Mtito Andei: reconstruction of the existing road, including some major re- alignment. Funded by the EU, re-tendering the contract expected shortly. * Nyayo Stadium - Machakos Turn-Off: repair and reseal contract to be tendered. Funded under the fuel levy. The proposed works will provide some short-term benefits and is a holding intervention until the funding for the full reconstruction is available. * Kabete - Limuru: repair and reseal contract to be tendered. Funded under the fuel. This is another holding intervention. * Mai Mahiu - Lanet: full reconstruction of the road. Funded by the EU, date of tendering not known. 9

Design Studies: * Maji Ya Chumvi - Miritini: full reconstruction proposed. Design has been undertaken by MORPW and is now under design review by consultants who will also prepare bidding documents. The design review is being funded under the IDA Nairobi-Mombasa Road Reconstruction Project. The relatively short section (35km) has been proposed as a Supplementary Credit under the Nairobi-Mombasa Road project. * Machakos Turn-Off- Sultan Hamud: the feasibility and detailed design is now underway, funded under the Nairobi-Mombasa Road Project. * Lanet - Mau Summit - Timboroa: the feasibility, detailed design and preparation of the bidding documents has been completed, funded under the Nairobi-Mombasa Road Project. Funding for the reconstruction is now required. * Mau Summit - Kisumu: draft feasibility and preliminary designs have been submitted to MORPW, funded under the Nairobi-Mombasa Road Project. Unfortunately, the reports have yet to reach an acceptable standard for funding considerations. Other Main Routes * Amala River - Sotik: repair and reseal contract has become full rehabilitation/reconstruction contract. An additional contract will be required to complete the section. Funded under the fuel levy. * Nairobi - Thika: repair and reseal contract prepared. Another holding intervention. Fuel levy funds * Mai Mahiu - Narok: major rehabilitation of the road agreed. Joint ADF/KfW funding.

In addition to the above works, the PPLAF financed Kenya Road Concession Study has identified the Mombasa - Nairobi - Malaba road (the main Northern Corridor route) as suitable for a full road concession with private sector capital financing repaid from road tolls.

8. The Unpaved Road Network

The road survey only included about 550 kms of unpaved road, which is clearly much too small a sample to draw statistically meaningful conclusions about a classified unpaved road network of about 55,000 kms, a 1% sample is too small. However, the unpaved roads traveled were more or less randomly selected and may provide some indications of the present status of the network: * Many of road sections traveled have been re-graveled in the recent past. Much better road profiles were encountered than expected (the Taveta - Loitokitok road being a notable exception), but it was clear that frequency of grading was often insufficient to maintain the full camber of the road. Water was often ponding in the centre of the road or gullying was taking place in the center of the road on gradient sections. There was little indication that potholes were being patched. * Many of the re-graveling contracts appeared to be of reasonable quality, but several DREs reported that the effective contract periods were often far too extended, with work being undertaken intermittently when funds became available. Consequently, deterioration often started on the first sections of a contract before the last sections had been completed. This seems a very inefficient use of funds and contracting capacity and diminishes the impact for road users. * Gravel haul distances in some areas, e.g. central Kenya, are now up to at least 20 kms and add considerably to the costs of re-graveling. This further emphasizes the need to move rapidly to the Roads 2000 strategy of spot rather than full gravelling, not only to reduce total maintenance costs but also to conserve remaining gravel sources. 10

* Some of the 'gravel' roads driven, such as the Mwatate - Taveta road, have effectively not been gravel roads for very many years, though some remnants of gravel surfacing sometimes remain in some sections. The results of the full road inventory and condition survey will be very interesting in this regard and should perhaps lead to a substantial reclassification of roads by surface type. * The rationale of the full re-graveling contracts, given the supposed adoption of the Roads 2000 strategy, on many of the roads traveled is not clear. Certainly, the level of priority must be questioned in some instances, given the acute shortage of funding in the sector and the numerous competing needs. * On several roads, spot improvements have been financed under the El Nino Emergency Project. The quality of some of these works, especially the location and construction of culverts, raised questions. More generally, it was reported that the use of spot improvements raises problems of public acceptability. Once some spot improvements are undertaken, especially spot re-gravelling, the remaining sections of the road then appear in a much worse condition. Public education to raise awareness of the Roads 2000 approach to road rehabilitation and maintenance may well be required in order to avoid unrealistic expectations being created. * The constituency funding for D, E and 'other' roads, provided under the KRB Act, seems to have been a very successful innovation which commands widespread support at the local level, including all the DREs interviewed. For the first time in very many years (outside those districts which were included under the Minor Roads Program-me, or Roads 2000 Projects), some funding is going to the truly district roads. The funds are being used for either routine maintenance or spot graveling or additional culverts. The level of funding is still very small but perhaps, once the overhang of the present graveling contracts is removed, more of the 24% of the Fuel Levy funds (to be allocated equitably between districts), will be allocated at the local level, especially if linked to support the introduction of the Roads 2000 Strategy. * On at least one of the roads being graveled under contract, oversized material well outside the normal definition of gravel is being used. Similar material was previously observed on some roads improved under the Minor Roads Programme. The results from using this oversized material are very positive, providing what appears to be a reasonable all-weather surface which will require substantially less maintenance. Given that traffic flows on most of the unpaved roads is very low and all-weather access is the primary need, this type of intervention should perhaps be used much more widely. * Clearly not all the roads traveled could presently be classified as all-weather, though even the Taveta - Loitokitok road might be classified as all season - though with extreme difficulty during the rainy seasons. However, on some of the roads, the spot improvements may have to be fairly extensive to bring the roads to all-weather status. Compared with some other countries in which the team has worked, the average light vehicle speeds on the unpaved rural road network were reasonable, less than 10% of the road sections had speeds of less than 35 kph, and none below 20 kph. Rural road surveys in the Philippines, for example, tended to classify roads as bad only if the speeds fell below 20 kph. I1

9. Road CategoriesforMaintenance and Intervention Planning

Road planning in Kenya may have to begin to reclassify the unpaved roads according to their function and level of traffic, rather than treating them as a single category for which one strategy is appropriate. There is a relatively small but significant network of unpaved roads which function as important collector routes and have traffic flows that would justify paving, in an unconstrained financial scenario; for these roads, the level of road user service is important.. There is also a very large network of classified and unclassified roads which carry extremely light traffic flows but provide an extremely important accessibility function; for these roads the level of service is not really important but the level of accessibility is critical.

Basically, the road network might be divided in the following categories: i. The main paved road network, serving important national/international needs, with high traffic volumes, requiring full conventional paved road maintenance, both routine and periodic, having been brought to a maintainable condition; ii. The remaining paved road network, serving lower priority (and sometimes past political) needs, most should be maintained but, given the funding constraints, some may best be allowed to revert to being unpaved roads iii. A small network of highly trafficked unpaved roads which should be upgraded when funds permit. In the meantime, maintenance should try and maintain a reasonable level of serviceability. These roads may well deserve full 'conventional' unpaved maintenance with regular grading and graveling. The upgrading of some of these roads may have a higher priority than the rehabilitation/reconstruction of the more lightly trafficked paved roads; iv. A significant network of unpaved roads with traffic flows >100 ADT which justify some grading and the spot gravelling required to maintain all-weather access; v. A very extensive network of unpaved roads, both classified and unclassified, with flows <100 ADT or more probably even <50 ADT which are vital to provide accessibility to and for the rural areas but for which road service standards are a very secondary issue. This network should be maintained and improved or rehabilitated under the Roads 2000 strategy to achieve all-weather or perhaps all-season accessibility over a single lane width Reclassification of the road network, as an essential element for rational maintenance and intervention planning and funds allocation, should be an important priority for the Kenya Roads Board and should accompany the inventory and condition survey. However, it is also recognized that some roads, given their political/strategic importance may require a rather different level of classification and maintenance intervention than their traffic levels would indicate.

10. DistrictPerspectives

The team visited the offices of the District Road Engineers in 11 districts in Coast, Eastern, Rift Valley, Western and Nyanza Provinces, thus covering much of Kenya and providing a reasonably representative sample. In most districts, the team was able to meet with the DRE but, in a couple of districts, the DRE was in Nairobi and either a senior road inspector of the District Works Officer was interviewed. The interviews were informal but structured around a number of issues, such as the availability of equipment (both from the Mechanical and Transport Department (MTD), and from the private sector), the use of contractors, the type of maintenance being undertaken, the impact of the new financial arrangements, the 12 role of the District Roads Committees (DRC), etc. The results of the individual interviews are summarized in an annex to this report.

Availability of equipment: all but one of the districts visited had one or two working MTD graders, though they were reported to be very old and the level of availability was poor. Some districts also had working tippers, and in one case a working wheel-loader shovel. While labor based working is used quite extensively in some districts, grading remains an important activity. Most of the DREs reported that equipment for hire from the private sector is available and is being used. However, the level of equipment availability and ease of hiring varies considerably according to the area and the proximity to large centers like Nairobi and Mombasa. Several of the DREs mentioned that it was expensive. The DREs not using hired equipment each had two graders or access to provincial equipment. A number of the DREs using hired equipment thought that they should still have some departmental equipment for emergency use. From these interviews, it would appear that equipment hire is not a major constraint. It is available throughout the country. It is presently being hired on a rather piecemeal approach and it seems very probable that a more coordinated approach would result in a supply response from the private sector, increased availability and lower prices. While there may be an argument for a small nucleus of government equipment to provide a rapid response in acute emergency situations (which might already exist under military control), there is little justification for the continuation of a large government equipment pool unless it can perform more efficiently and at lower total cost than the private sector.

District Staffing: quite clearly, the large pool of permanently employed laborers, created in the 1980s, has been drained by natural attrition and the retrenchment process. Permanent road camps remain in all the districts but have no staff beyond watchmen. Where force account work is undertaken, all the districts report that they now rely completely upon casual, daily paid workers. This is a very welcome development, allowing a much more cost-effective use of available maintenance funding. It remains unfortunate that the creation of the large permanent labor force did so much to destroy the effective maintenance capability of the MORPW in the 1980s and early 1990s, with almost all available funds being used for salaries to the exclusion of the funding of the complementary inputs of materials, tools and transport. The remaining staff in the districts consist of the supervisory staff, some drivers and plant operators and financial clerks. The number of supervisory staff varies quite widely by district, from 5 in some districts to as many as 13 in others. Most of the staff in those districts with large numbers of supervisory staff are overseers and several DREs reported that they had an excess of overseers and a shortage of qualified road inspectors to undertake the supervision of contracts. Most DREs indicated that they and their staff required training in the effective supervision of contract work. Other reports have highlighted the inadequacy of contract supervision. The more extensive use of contracting in the districts may require a further re-adjustment to staffing levels, though possibly overseers/supervisors can be trained for the adequate supervision of smaller, labor-based works.

Contracting in the Districts: one of the potential constraints to the implementation of the Roads 2000 strategy was thought to be the availability of small contractors to undertake the labor-based works. The DANIDA project in the Coast Province has been training large numbers of small contractors, drawn from both existing small contractors in other works and retrenched MORPW staff. All but three of the DREs interviewed already use small contractors quite extensively, and one of the three DREs intends shifting from force account to contracting in this financial year. 13

There appears to be no shortage of available contractors, many of the DREs report that there are large numbers available in their districts. The contractors are primarily used as labor contractors on the unpaved roads. No DRE reported using small contractors for pothole patching on the paved network. However, given the number of MORPW supervisors/overseers with experience of pothole patching, there should be the experience available to establish small contractors for this work, as long as the materials issue can be resolved.

District Finances: unanimous agreement that the establishment of separate accounts for roadwork activities has been a major improvement on the previous system. All the districts had received the initial releases of the constituency funds from the Fuel Levy. The position with respect to the A, B and C classified roads was much more varied but little funding had yet been released. None of the 24% of District funds has yet been released to the district roads committees, but is being used to finance the on- going contracts. The team was told in several districts that the re-gravelling contracts would be largely completed by the end of FY 2002. The funds should, therefore, be available for distribution in FY 2003. This will raise the requirement of developing "equitable" allocation criteria for the distribution of funding to the districts. The proposed IDA Roads 2000 project faced the same problem and put forward the concept of giving equal weight to population, land area and length of the road network. However, there may well be other "reasonable" methods of allocating the funds equitably. Some districts either are, or will be receiving donor funding under the Roads 2000 program. It will be have to be decided whether the distribution of the fuel levy funding, for districts, will be gross or net of donor funding.

DRE Responsibilities: In some districts, the DRE was undertaking maintenance for all categories of A, B and C roads, in others the DRE appeared to have no role with respect to these roads, in the rest the DRE was handling the unpaved A, B and C roads only. The Provincial Roads Engineer, presumably with the resealing units (used largely for patching) has taken the primary role for the more important paved roads.

The District Roads Committees (DRC): The experience of the DRCs spans a very wide spectrum from the very bad to the positive. In some instances, the DREs have found it extremely difficult to obtain quorums for meetings of the DRC, there have been major difficulties in some DRCs determining priorities and accepting the limitations on the level of funding and the types of work that can be undertaken, and other districts have encountered problems when the works are being implemented with interference by the members of the DRCs. In other districts, however, there seem to have been no problems with the DRC working with the DREs to draw up the constituency work programs - normally initiated by the DRE but often amended during discussions with the DRC. Overall, there were problems reported with the DRC in rather less than 50 percent of the districts with the severity of the problem varying from the relatively slight to really bad. The experience from some districts suggests that the reclassification of the DRCs from an executive to advisory role has prevented really serious problems of accountability from developing. In some instances, members of DRCs were establishing companies to undertake the work being allocated by the DRCs. The MPs generally want to make sure that funds are allocated throughout their constituencies, rather than concentrating upon priorities. Funds may thus be spread too thinly to make an impact. But the types of work being undertaken are appropriate for the Roads 2000 type strategy for the rural road sector - routine maintenance, additional culverts and some spot gravelling. Funding is still very limited, but as several DREs commented, it is the first time that they have ever received any funding for these categories of roads. 14

It does not appear that the work plans of the DRCs are being made widely available to the public. Neither the DRCs nor the KRB appears to be publishing the work plans and budgets in a readily accessible manner. The team feels that such publication would add considerable to transparency and accountability within the sector. While the DRCs are functioning and working closely with the DREs, it is clear that they have yet to take over from the local authorities with respect to urban roads within the districts. The DREs report that work programs approved by the DRCs often include some unclassified rural roads, but include nothing within the municipalities, even though they are represented on the DRCs. Similarly, there still appears to be minimal contact between the DRE's and the engineering departments of municipalities. Some maintenance work on the unclassified road network is still being undertaken by local authorities, financed from various crop cesses. This work and its planning/prioritization is still undertaken independently from the DRE and DRC. The allocation of responsibilities for both the planning and execution of works in the districts is still confusing and further efforts will be needed to bring coherence to a system which still must be considered as a work-in-progress.

Prioritiesfor District Works: At the present time, the level of funding available for districts roads is small but, with the addition of the 24% of the fuel level for districts, will soon become substantial. The KRB is required to approve the work plans for districts, but it may also be desirable to provide some form of guidelines to the DRCs for prioritizing the district works. Such guidelines might cover all funding going to the districts or only the 24% district allocation. Such guidelines would help to avoid blatant political distribution of funds, by requiring that roads serve minimum numbers of either vehicles or population, connect to the existing all-weather network, improvements cost less than a certain amountlkm, etc. The use of such criteria might be a guide rather than a rule, allowing DRCs the opportunity to go beyond the guidelines in exceptional and specifically justified circumstances. The district work plans should be accompanied by demonstration that the works meet the guidelines, with justification when proposed works are outside the criteria. 15

Annex A KENYA: VEHICLE SPEEDS

(i) Paved Roads

Kph Knis % Cum.% 0 - 25 0.0% 0.0% 25 - 35 10 0.4% 0.4% 35 - 45 86 3.2% 3.6% 45 - 55 134 5.0% 8.6% 55 - 65 223 8.4% 17.0% 65-75 531 19.9% 37.0% 75 - 85 675 25.4% 62.3% 85 - 95 592 22.2% 84.6% 95- 105 327 12.3% 96.8% 105+ 84 3.2% 100.0% 2662 100.0% Mean average speed 78.5 kph

Light Vehicle Speeds: Paved Roads u 30.0%0 E 25.0% - ^=_ _ X 20.0%-

L 150%

0 - 26 25 - 35 36 - 45 46 - 55 65 - 65 65 - 75 76 - 85 86 - 95 96 - 106+ 105

Light Vehicle Speed (KPH) 16

(ii) Unpaved Roads

Kph Kjns % Cum.% 0 -5 5-10 10-15 15 -20 20 - 25 16 3.0% 3.0% 25 - 30 16 3.0% 6.1% 30 - 35 18 3.4% 9.5% 35-40 66 12.6% 22.1% 40 - 45 103 19.6% 41.7% 45 - 50 150 28.6% 70.3% 50 - 55 96 18.3% 88.6% 55-60 10 1.9% 90.5% 60 -65 50 9.5% 100.0% 525 Mean average speed 45.9 kph

Light Vehicle Speed: Unpaved Roads

U' 30.00%- X 25.00% - , 20.00% C 15.00% 'a- o 10.00%- 5.00% W ~0.(00%( 0 - 5 5- 10- 15- 20- 25- 30- 35- 40- 45- 50- 55- 60- 10 15 20 25 30 35 40 45 50 55 60 65 Light Vehicle Speed (kph) 17

Annex B KENYA TRAFFIC

(i)Paved Roads - excluding Northern Corridor

ADT Km % Cum % 0-500 249 16.7 16.7 500- 1000 746 49.9 66.6 1000- 1500 222 14.8 81.4 1500 -2000 106 7.1 88.5 2000 -2500 64 4.3 92.8 2500 -3000 67 4.5 97.3 3000+ 41 2.7 100.0 1495

Traffic Flows: Paved Roads (excluding the Northern Corridor)

60.0 - 5__

1 40.0 a. 30.0- 20 0 -__ 10,0

0.0.0 0 - 500 500 -1000 1000 -1500 1500 - 2000 2000 - 2500 2500 - 3000 3000+ Auerage Daily Traffic

(ii) Northern Corridor Daily Traffic Total Heavy % Heavy Malaba - Webuye 1250 550 44 Webuye - Eldoret 1600 575 36 Eldoret - Timboroa 1650 600 36 Timboroa - Mau Summit 1625 800 49 Mau Summit -Nakuru 4025 1450 36 Nakuru -Naivasha 5675 1500 26 Naivasha - Uplands 1950 325 17

Athi River-MachakosT.O 4780 1810 38 Machakos T.O - Salama 2560 1375 54 Salama - Sultan Hamud 2330 1340 58 18

ANNEX2

PORT OF MOMBASA: CARGO CLEARANCE

The processes and procedures, detailed below, apply to container traffic. But, apart from differences in cargo handling, most also apply to other cargo categories although bulk, low value cargo have less problems with respect to customs verification.

1. EXPORT CLEARANCE

The delivery of containers or other cargo to the port for export is relatively straightforward. * The shipper (or the c&f agent) places a booking with the shipping line or shipping agent. * Based on information provided by the shipper, the shipping agent will prepare export documentation. * The shipper submits the export documentation and a Customs Export Entry submits to Customs. * If approved, the documents are sent from Customs to the Port Central Documents Office (CDO) for registration and subsequent passing to Port Revenue Accounts where the shore handling charges are calculated. * The shipper pays the shore handling charges. At this stage, the shipper may not know the container numbers in which the consignment will be packed. It is the responsibility of the shipper, in consultation with the shipping agent, to arrange delivery of the containers/goods to the port, prior to the nominated closing date of the vessel. The closing date is established by the KPA, in consultation with the ship's agents'.

Once the cargo is stuffed into containers, the shipper arranges for the documents to be endorsed with the container and seal numbers. For certain cargoes which have a history of interference from the authorities, such as coffee, shipping lines may, at their option, have independent tallymen at the loading warehouse to verify the number and condition of the bags being loaded. The shipping line or exporter may also have their own padlocks on the container and have it escorted to the port by their own staff. The container is then transported to the port gates.

Depending on the sensitivity of the cargoes and its origin, Customs and Police at the gate often insist that the container is opened and the contents inspected before entry into the port. For security, the shipper or his agent must accompany the container to the port in order to reseal after gate inspection. The numbers on new seals, if applied, have to be endorsed onto the shipping documents.

Export deliveries can take place from 0600 to 2300, seven days a week, prior to the nominated closing date of the vessel.

Once permitted to enter the port, the container is taken to the container terminal where it is registered and documents checked to ensure that all stamps are present and that all charges have been paid. Providing

' It is normally the date/time vessel comes alongside to commence discharge operations prior to starting the loading process. 19

that the documents are correct and the necessary documentation has arrived from the CDO (indicating that the containers have been cleared for export), the container will be directed to a particular export stack reserved for the nominated vessel. Transporters are allowed to enter the terminal for the purposes of delivering and collecting containers. At the stack, the container is offloaded and placed into the stack, using whatever equipment is available - RTG, front loader, top lifter, or reach stacker. The truck then departs from the port.

The whole process takes between 4 and 6 days to accomplish. The entire clearance process with the Customs and KPA is paper based and manually completed. Computerization is barely employed in the Port or Customs.

The procedures are inefficient and time consuming. The process is also prone to informal incentive payments to ensure documents are processed and containers offloaded. Exporters pay these charges rather than risk delaying the cargo and missing the nominated vessel2.

2. IMPORT CLEARANCE

While time-consuming, the bureaucracy and informal costs involved in exporting are trivial compared with the import process3. For the purposes of this analysis, it is assumed that the cargo is cleared in Mombasa, though exactly the same procedures are applied at the inland container depots (ICDs).

Document ClearanceProcedures The basic documents required to clear import cargo are: * Original Bill of Lading (three copies) * Customs Clean Report of Findings (CCRF) - issued by pre-shipment inspection company (PSI), in the country of origin * Commercial Invoice - issued by supplier * Import Declaration Form (IDF) - issued by Kenya Revenue Authority (KRA) * Customs Entry * Mombasa Port Release Order (MPRO) Prior to submitting the clearance documents to the Customs Long Room, the c&f agent must obtain the release of the consignment from the ship's agent.

2 If the consignment misses the nominated vessel, the c&f agent/shipper has to lodge amendments to the original export documentation, changing the name of the nominated vessel. There are no additional KPA charges for this but, if the new vessel is from a different shipping line, the cargo has to be repacked into a container belonging to the new carrier. KPA charges USD 100 x 20' container or USD 200 x 40' for this repacking. However, these charges are small relative to the potential losses suffered by the merchant not being able to negotiate the Letter of Credit on time.

3The information on the import procedures was obtained from the c&f sector. There was unanimity that, at every step in the convoluted process, any official in charge of a rubber stamp invariably required an infonnal payment. The sums involved per transaction are relatively small, but it is indicative of the culture that has pervaded the sector. 20

The shipping line/agent, on being satisfied that the c&f agent is duly authorised to clear the consignment, endorses the Bills of Lading as having been released to the importer or his agent on payment of: * Terminal Handling Charges (THC) - charged by the shipping line * Container Deposit - charged by shipping line against demurrage penalties if the container is not returned empty to the shipping line within the free period (usually 14 days for Kenya, and up to 45 days for transit containers), or if the container is lost or damaged while in the custody of the importer or the c&f agent. * Any other charges applicable either raised by the shipping line or by the agent directly The shipping line will usually retain one original bill of lading and return the other two copies to the c&f agent, endorsed that the container has been released to the importer/c&f agent. Customs will no longer accept Release Orders from the shipping lines because of the increase in forged documents being presented in recent years.

The Import Declaration Form (IDF) is obtained from KRA on presentation of: * Bills of Lading * CCRF * Commercial Invoice * Payment of a fee, 2.75% of the declared c.i.f. value. This fee is collected by KRA to cover payments to the PSI company and is additional to any duties and taxes that may be levied by Customs. After documents have been deposited with Customs Long Room, the documentation can be passed within 48 hours if all documents are in order4. The documentation clearance can be delayed by lack of the ship's manifest, or errors in the PSI's CCRF.

Ship's Manifest: Customs and KPA require the shipping lines to lodge an Import Manifest, prior to the vessel arriving in port or discharging cargo. The manifest is a record of all cargo destined for discharge at the port. Customs require the manifest to check Bills of Lading; KPA requires the manifest for container quantities and numbers, declaration of contents, especially hazardous cargoes, as well as numbers of containers for upcountry destinations. Without the Manifest, neither Customs nor Port will process any import entries for the vessel. There is some criticism of the shipping lines failing to provide manifests in time, particularly on short routes. Shipping lines are aware of the problems and most are attempting to correct the situation by more efficient use of e-mail and electronic data interchanges (EDI).

CCRF: The c&f agents are very critical of the role and efficiency of the PSI companies. Many agents reported instances when the details on the CCRF did not agree with the Commercial Invoices or the Bills of Lading. Customs insist that the details should correspond in all respects; any errors or inaccuracies such as spelling mistakes in descriptions, or errors in recording number or weights of contents declared, can lead to documents being rejected and the importer having to go back to the PSI company to have corrections issued. The c&f agents maintain that the rate of inaccurate documentation from the PSI companies is +25%, which they consider grossly excessive. It takes the PSI companies, on average, 5 working days to rectify errors on documentation.

4 A minimum incentive payment of Kshs 500/teu for a single container consignment is required. The payment increases for high value or multiple container consignments. Without incentive payments, documents can be arbitrarily rejected or processing extensively delayed. 21

Once the Customs entry has been approved, Customs require duties and taxes to be paid by banker's cheque. The payment can take up to one day to arrange.

On payment of all duties and taxes demanded, Customs issue a receipt to the c&f agent and arrange the direct dispatch of the documents to the Port Central Documents Office (CDO). The Customs Long Room is situated at the port but in the center of the town. There has been no action to implement the recommendations to relocate the Long Room to the port area. There are two shuttles a day, moming and aftemoon, between Customs and the CDO. Depending on the time when the documents are cleared, it can take several hours or a day before documents arrive at the CDO.

At the CDO, documents are registered and transferred to the KPA Revenue Office. Shore handling and any other charges, as per KPA tariff that may be applicable, are calculated and must be paid by the c&f agent. One day, on average, is necessary to complete this part of the process.

If the documents are cleared and KPA charges paid, before the arrival of the vessel, KPA allows a free period of 4 days (from date of vessel arrival) for the removal of cargo from the port. If however, the vessel has already docked, the free period allowable is reduced to 2 days from the date of payment.

Verification Procedures

It is mandatory that all Kenyan imports are verified. Cargo verification can be either: (a) 100%, in which case that the entire container must be unpacked and the contents physically examined; or (b) sight inspection, meaning that the container is opened and a cursory inspection of contents nearest the doors is performed. The normal practice is to endorse a container for sight inspection. However, any Customs officer (even one on the quayside) can, at any time, demand that a container be subjected to 00% verification, without having to justify the decision. Full verification imposes significant additional costs and delays on the importer, the threat of a 100% verification stop order is reported to be often used by customs' officers as the entry point into the port's informal economy.

If a container is only subjected to sight inspection, verification is done at the inspection yard within the terminal area. If a container is to be subjected to 100% verification, it must be transferred to a special site, outside the container terminal, behind berth 14. It is the KPA responsibility to move the container to these areas and this is normally achieved within 48 hours5.

For verification to take place, the c&f agent must ensure that the following are present: * Customs * KPA Security and Port Police * CID and Special Branch (National Intelligence Services) * Any other department that may be interested e.g., Kenya Bureau of Standards, KEPHIS, Port Health, Dairy Board, Radiation Board, etc.

5 While it is KPA's responsibility to move the container to the verification area, the industry reports that this does not automatically happen. KPA's equipment operators all demand incentives before they will remove the container from the stack and place it on a flatbed or trailer. The normal price isunderstood to be Kshs 200 per teu. 22

All parties must be present at the time of opening the container, otherwise the verification is deemed invalid and the process has to be repeated later, when all parties are present6. The onus of responsibility is very much on the c&f agent to ensure that all parties are physically present, even to the extent of locating the individuals and driving them to the inspection site'. The rules apparently do not provide for disciplinary action against any government official who fails to attend or willfully absents himself, nor does it allow for compensation for importers who may have suffered financial loss due to the failure of a verification to take place at the appointed date and time.

After the completion of verification, the Customs Entry and MPRO must be endorsed by all parties attending. For an MPRO to be valid, the following stamps/signatories must appear:

Customs Long Room Customs Officer in attendance at verification CDO KPA Revenue Department Port Police officer at verification Port Police Senior Duty Officer in Charge CID officer at verification CID Senior Duty Officer in Charge Special Branch Officer at verification Special Branch Senior Duty Officer in Charge KPA Security Officer at verification KPA Security Senior Duty Officer in Charge Kenya Bureau of Standards (KBS) Some of the stamps/signatories are from individuals who would not normally attend the verification. It is, therefore, necessary for the c&f agent to go with the documents to their offices and obtain their signatures. This in itself can take up to one day to accomplish, especially if they are absent from their desks.

Port Exit Procedures

Once the MPRO is completed and approved, a Gate Pass is issued. KPA is responsible for loading the container but, in practice, the c&f agent must arrange the transport and motivate the equipment operator to place the box on the truck.

At the port gates, all documents are once again checked and the container is opened for a further visual inspection. KPA staff check to ensure that the container is leaving within the applicable free periods and that no additional storage/demurrage charges have been incurred. If additional charges are applicable, these have to be paid and receipts obtained, before the container can leave the port. Customs, Port Police, KPA Security, CILD and Special Branch also have to inspect the container and endorse the Gate Pass. The process of going through the gate security checks can take up to one day, and again the officials must be motivated. The port imposed restrictions, in early 2002, on the removal of containers from the port. Containers can now not be removed after 1800 on weekdays, and 1500 on Saturdays. This restriction has reduced the truck rotations effectively to one/day and contributed to a build-up of containers within the port.

6 Apparently, the regulations do not provide for disciplinary action against officers who fail to attend, nor compensation to importers who suffer financial loss from the failure of verification to take place at the appointed time 23

Overall Clearance Time (days) for Kenyan Imports

Clearance Procedure Fast Track No Motivation Obtaining release orderfrom shipping line and paying THC and container deposit 1 1 ObtainingIDF 2 2 Lodging documents with Customs and obtaining approval * 4 +8 Obtaining a banker's check and payment of duties and taxes I 1 Transferof documents to CDO and registration 1 Calculationand payment ofport charges at KPA revenue office I I Time for procedures which can be completed before vessel arrival 10 +14 Dischargeof box from vessel andplacing into import stack I I Transferof box from import stack to verification area 2 +5

Verification /2 +2 Post verification authorizations /2 1 Lift off ex stack onto lorry and exit through gate 1 +3 7Time for procedures which must be completed after vessel arrival 5 +12 TOTAL TIME FOR COMPLETING PROCEDURES 15 +26 * Assumes that the CCRF was in agreement with other documents and no corrections required

3. TRANSIT PROCEDURES

The port clearance procedures for handling transit traffic is simpler and more straightforward. Customs entries can be processed in 2 days and no verification of containers is required (unless ordered on state security grounds) 8. However, Customs require transit bonds as security against goods being diverted into the local market without payment of duty. These bonds can only be cancelled when the necessary documentation are presented in Mombasa to demonstrate that the goods were imported into a neighboring country. Most c&f agents carry a large portfolio of outstanding bonds, though it is not clear whether bonds, on any significant scale, have ever been called in by Customs. The general conclusion is that the bonds are ineffective in controlling transit diversion. If large scale diversion is planned, arrangements are also made to ensure that the right stamps are obtained to give the appearance that the goods exited from Kenya.

Transit cargo are also subject to other procedures, designed to ensure that there is no diversion. Trucks, carrying transit cargo, must report at a number of checkpoints along the route and sensitive cargo must move in escorted convoys. There is a daily convoy from Mombasa to Mariakani, but strangely, thereafter only three convoys per week to Uganda. Average transit time to the Ugandan border is said to be between 5 and 8 days depending on the convoy.

4. INFORMAL PAYMENTS AND STREAMLINING CLEARANCE

The c&f companies stress that they do not support the concept of bribery but the system is so entrenched that, in order to survive in a competitive sector, they have to pay incentive payments. The industry is highly competitive and companies cannot afford longer clearance times than their competitors - a fact well understood by customs and KPA officials. While the problem of informal payments is pervasive and is a major factor in lengthening clearance times and streamlining procedures, the total level of payments

8 This is a major improvement. During much of the 1980s and 1990s, transit containers were also subject to verification. 24 is almost trivial in comparison with either the value of the cargo, or indeed the costs of transport. The standard payments appear to be about Ksh 500/TEU to customs officials for clearance and a further Ksh 400/TEU to KPA operators for lifting containers onto trailers for movement to the verification areas and then for loading containers onto trucks for transport out of the port. With additional payments at the port 9 gates, etc. the level of informal payments may total Ksh 1000 - 1200/TEU, i.e. about US$15/TEU .

Assuming the average value of containerized imports is $1,500/ton, the cargo value of the average TEU would be around US$20,000 and the informal payments a trivial 0.075% of the cargo value. Total transport costs from Europe to Nairobi are about US$ 1,800/TEU, so the informal payments account for some 0.8% of the total transport cost. It would be much more efficient to pay the officials directly the US$1.5 million, or indeed more, in order to achieve substantial streamlining of the clearance procedures. It is almost inconceivable that importers would not pay an additional US$15/TEU, or indeed significantly more, to reduce customs clearance time to 2 or 3 days.

In terms of the competitive position of Mombasa, however, the informal payments may be rather more important as they account for some 5% of total port charges. This may be significant as Dar es Salaam has succeeded in eliminating informal payments to equipment operators (by excluding c&f agents from the container terminal area) though not to customs.

The KRA does not have a computer system for processing customs entries. An attempt was made, some ten years ago, to introduce computerization but it never became operational. There is little doubt that computerization, if properly planned and implemented, would go a long way towards speeding up customs clearance and reducing the opportunities for informal payments. Unless the issues of customs and KPA salaries and incentive payments are recognized and the rewards for officials suitably modified, computerization may be strenuously resisted or its impact nullified by the imposition of additional regulations and procedures.

The KPA has already initiated consultations within the industry, incorporating the c&f industry, the shipping lines and agents, KRA, Police and other institutions on the parameters for a community based system for EDI, the objective being to make Mombasa a paperless port by 2003. While most participants agree that the time frame is extremely optimistic and ambitious, all legitimate participants in the industry recognise that this is something that will have to be done to bring Mombasa into line with other major ports in the world.

9It is understood that similar amounts are required to (a) have an import transit entry passed and security bond lodged and (b) to have the transit box loaded onto a rail wagon or vehicle. 25

Annex 3 Strategic Review: Civil Aviation

1. KENYA AIRWAYS: Key Operating Statistics

- 1.999< : 2000 -2001 - -% ______~Cha~nge - -Change Passengers 1,047,440 1,323,400 +26 1,473,799 +11.4 Revenue Passenger 2,049 2,722 +33 3,436 +26.2 kilometres (millions) Available Seat Kilometres 3,277 4,323 +32 5,313 +22.9 Passenger Load Factor 62.5 63 +0.5 64.7 +2.7 Cargo - Tonnes Uplifted 151.75 16,739 +10 22,908 +36.9 26

2. KENYA AIRWAYS FINANCES

Group Balance Sheet

2001 2000 ' 1999 '1998 .1997 KSfI- - hsi -;hKSShKS . - KlSWhs '&Shs,

ASSETS Non-Current Assets Property, Plant & Equipment 11,249 10,120 11,244 7,348 5,692 Other non-current assets 1,327 562 371 1,140 973 Total 12,576 10,682 11,615 8,488 6,665

Current Assets Inventories 798 840 931 815 626 Receivables & other non-current assets 4,839 7,062 2,960 2,307 1,737 Cash & cash equivalents 5,054 4,356 2,205 1,782 2,163 Total 10,691 12,258 6,096 4,904 4,526 Total Assets 23,267 22,940 17,711 13,392 11,191

Equity & Liabilities Share capital 2,308 2,308 2,308 2,308 2,308 Reserves 5,271 4,956 4,208 4,199 3,613 Proposed dividends 346 346 - 461 231 T'otal 7,925 7,610 6,516 6,968 6,152

Non-current Liabilities Interest bearing loans 6,637 6,909 6,562 3,580 2,088 Deferred taxation' 2,027 1,094 1,173 - Total 8,664 8,003 7,735 3,580 2,088

CurrentLiabilities Sales in advance of carriage 1,621 989 734 593 568 Trade and other payables 3,939 5,793 1,931 1,955 2,243 Other 1,118 545 795 296 140 Total 6,678 7,327 3,460 2,844 2,951 Total Equity & Liabilities 23,267 22,940 17,711 13,392 11,191

Group Cash Flow Statement Net cash from operating activities 3,992 3,113 749 995 521 Net cash (utilised in)/from investing-activities (1,779) 686 (2,449 (2,333) (2,487) Net cash (utilised in)/from financing activities (1,601) (1,382) 2,038 852 548

Net increase/(decrease) in cash and cash equivalents 542 2,417 338 (486) (1,418)

Source: 2001 Annual Report, Kenya Airways 27

3. INTERNATIONAL SCHEDULED SERVICES: FOREIGN CARRIERS On-Line - Nairobi

-Carrier Origin Destination Aircraft Type' - Frequency":: -- Air India BOM NBO A.310 2 NBO DAR A.310 2 No local rights Air Mauritius MUR NBO A.310 1 Air Zimbabwe LHAR NBO 737 2 Air Tanzania DAR NBO 737 3 British Airways LHR NBO 744 7 NBO SEY 744 2 NBO LIL 744 1 Emirates DBX NBO 772 7 NBO EBB 772 7 No local rights Ethiopian ADD NBO 737 6 Gulf Air NBO EBB 343 3 No local rights ABU NBO 343 3 KLM AMS NBO M.11 7 SAA JNB NBO 738 7 Sn Brussels BRU NBO A.330 5 Swiss* ZUR NBO M-1 1 4 Saudia JED NBO 772 2 Yemenia ADE NBO 733 ? Air Madagascar TNR NBO 733 1 Air Tanzania DAR NBO 733 2 ZNZ NBO 733 2 Air Malawi BLZ NBO Code share KQ only Source: Galileo: CRS

In addition, there are approvals for the following schedules:

C'arrier. , Frequency Dallo 1 Alliance Express 4 Air Burundi 7 El Al 2 Egypt Air 2 Oman Air 2 Cameroon Airlines 2 28

4. PRINCIPAL AIRPORTS: PHYSICAL CHARACTERISTICS

Airport Run yavs: - Elevation in Feet Type of Aircraft (Largest) Length & Width 1%.Metres _-_-_- JKLA 4117 x 45 5,327 Widebodyjet Mombasa 3350 x 45 169 Widebody jet Eldoret 3500 x 45 6,941 Wide body jet (payload restricted on 747/M-1 1 to Europe - runway length and elevation Nairobi Wilson 1463 x 24 5,350 Turbo-props, executive jets 1558 x 24 (short range) Lamu 1000 x 15 19 Turbo-props 900 x_20 Kisumu 2040 x 30 3,796 Narrow body jets Malindi 1402 x 30 80 Short haul narrow body jets 1128 x30 Lokichogio 1800 x 25 1,510 Turbo-props Nairobi Eastleigh Military 29

5. MINOR AIRPORTS

[All of these have no air traffic control and operate on visual flight rules -VFR].

Mandera Lodwar Amboseli Nanyuki Nyeri Marsabit Garissa Homabay Moyale Kakamega Kolokol Keekorok Kilaguni Magadi Kitale Hola Kisii Maralal Busia Isiolo Naivasha Bungoma Lokitaung Loyengalani Mtito Andei Makindu Makinnon Road Loitokitok Nakuru

Source: Kenya AIP Part 3. 30

6. AIR TRANSPORT: Commercial Aircraft

Traffic Handled at Main Airports, 1990 - 2001

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 JKIA Nairobi Movements (Number) 21,789.00 24,544.00 24,635.00 24,800.00 24,635.00 24,800.00 25,409.00 25,672.00 27,172.00 29,897.00 24,752.00 Passenger ('000) Landed 798.20 788.00 818.70 788.20 818.70 788.20 794.30 834.30 942.10 962.70 1,421.00 Embarked 762.00 769.90 828.30 801.20 828.30 801.20 828.40 855.10 950.00 988.50 1,413.00 In Transit 433.90 314.40 339.90 358.80 339.90 358.80 346.20 257.80 301.80 278.20 127.00 Total 1,994.10 1,872.30 1,986.90 1,948.20 1,986.90 1,948.20 1,968.90 1,947.20 2,193.90 2,229.40 2,961.00 Freight (Metric Tons) Landed 14,113.20 18,771.70 23,505.90 22,826.90 23,505.90 22,826.90 23,979.80 24,070.50 25,118.00 26,191.20 37,918.00 Loaded 41,132.20 45,021.50 59,341.90 48,395.60 59,341.90 48,395.60 39,721.10 40,764.60 39,783.10 42,131.30 101,702.00 Total 55,245.40 63,793.20 82,847.80 71,222.50 82,847.80 71,222.50 63,700.90 64,835.10 64,901.10 68,322.50 139,620.00

Moi International Mombasa Movements (Number) 13,079.00 8,691.00 8,783.00 9,270.00 8,783.00 9,270.00 7,851.70 8,215.00 9,517.60 10,612.50 9,049.00 Passengers ('000) Landed 324.80 346.30 368.70 364.50 368.70 364.50 342.90 425.30 426.90 463.80 427.00 Embarked 394.40 363.20 386.10 375.80 386.10 375.80 356.60 419.90 420.20 435.90 428.00 In Transit+ 40.30 20.10 30.90 23.70 30.90 23.70 49.60 42.70 46.30 45.40 46.00 Total 759.50 729.60 785.70 764.00 785.70 764.00 749.10 887.90 893.40 945.10 901.00 Freight (Metric Tons) Landed 1,045.70 466.60 707.30 761.10 707.30 761.10 826.60 1,829.50 2,001.20 2,011.70 1,435.00 Loaded 1,800.70 697.70 652.50 634.40 652.50 634.40 933.40 1,535.40 1,754.30 1,842.00 1,280.00 Total 2,846.40 1,164.30 1,359.80 1,395.50 1,359.80 1,395.50 1,760.00 3,364.90 3,755.50 3,853.70 2,715.00 31

Wilson Airport Movements (Number) 15,274.00 15,195.00 15,134.00 15,373.00 15,134.00 15,373.00 25,114.00 17,550.00 18,460.00 19,020.00 20,036.00 Passengers ('000) Landed 26.70 24.80 24.70 25.70 24.70 25.70 47.60 32.20 48.30 51.30 139.00 Embarked 28.30 34.20 34.10 31.90 34.10 31.90 42.20 35.80 51.70 54.60 122.00 In Transit + ------0.90 - - - 2.00 Total 55.00 59.00 58.80 57.60 58.80 57.60 90.70 68.00 100.00 105.90 263.00 Freight (Metric Tons) Landed 30.60 36.80 36.70 29.90 36.70 29.90 288.20 129.40 141.70 150.80 287.00 Loaded 93.60 97.70 97.30 80.80 97.30 80.80 163.30 112.90 123.90 158.30 2,431.00 Total 124.20 134.50 134.00 110.70 134.00 110.70 451.50 242.30 265.60 309.10 2,718.00

SUMMARY Passengers ('000) Landed 1,149.70 1,159.10 1,212.10 1,178.40 1,212.10 1,178.40 1,184.80 1,291.80 1,417.30 1,477.80 1,987.00 Embarked 1,184.70 1,167.30 1,248.50 1,208.90 1,248.50 1,208.90 1,227.20 1,310.80 1,421.90 1,479.00 1,963.00 In Transit 474.20 334.50 370.80 382.50 370.80 382.50 396.70 300.50 348.10 323.60 175.00 Total 2,808.60 2,660.90 2,831.40 2,769.80 2,831.40 2,769.80 2,808.70 2,903.10 3,187.30 3,280.40 4,125.00

Freight ('000 tonnes) Landed 15,189.50 19,275.10 24,249.90 23,617.90 24,249.90 23,617.90 25,094.60 26,029.40 27,260.90 28,353.70 39,640.00 Loaded 43,026.50 45,816.90 60,091.70 49,110.80 60,091.70 49,110.80 40,817.80 42,412.90 41,661.30 44,131.60 105,413.00 Total 58,216.00 65,092.00 84,341.60 72,728.70 84,341.60 72,728.70 65,912.40 68,442.30 68,922.20 72,48530 145,053.00

saafrkeOOI M:\Rosemary\ANIL\T-S-M-Vol 3-Sector Papers April 2003.doc May 30, 2003 12:15 PM Purpose/Outcomes: Full understanding by all key actors of policy development and implementation actions required to anchor transport in poverty reduction strategies; Methodology/approach agreed.

Results:

Key transport and other beneficiary actors fully engaged in poverty/transport alignment process in pilot case study countries, baseline analyses completed, methodologies tested and evaluated, action plan for transport sector strategy implementation drafted for adoption by government and other stakeholders; "New" countries selected on the basis of quality of proposals; Key transport and other beneficiary actors engage in and produce baseline poverty/transport analyses in "new" countries; Wider development community

Actions: Provide support so as to:

1. clarify next steps in pilot case study countries, agree revised methodology, identify other tools, identify participatory processes, actors, resources required, enable pilot case study countries to complete base-line poverty transport analysis and agree 2005 action plan; 2. Design new country selection procedures, identify new generic participatory processes in "x" new countries, agree revised methodology, identify other tools, resources required; assist SSATP members invited to submit proposals for commencing and establishing the necessary processes to fully understand and comply with any criteria for selection assessment that may be put in place; 3. enable new countries to complete a baseline poverty transport analysis 4. Ensure that all countries involved coordinate initiatives with operational implementation of any RSDP, TSP, or SWAP that might be in progress or under preparation 5. Ensure that knowledge of the processes is shared with all national and regional SSATP members through an ongoing process Risks, Assumptions, Cross- cutting issues

Alignment with RTPS work, where relevant; Coordinate with transport services (urban, rural) initiatives; Ensure transport & gender equity dimension fully absorbed; Ensure regional bodies kept informed.

How:

1. New draft methodology produced; 2. Procure consultancy services for 2004 coordination and facilitation; 3. Case study workshop - agrees methodology, agrees framework of proposals to be solicited from members, agrees next steps in original case-study countries, agrees coordination between current and new countries and links with all national and regional members; 4. Action plan agreed with case study countries, outputs to be achieved by end of 2004, indicators to be used. Liaise with WB operations TTLs and other active development partners; 5. Proposals invited from member countries for new work, submissions assessed (2004 outputs, indicators), successful countries designated (3-5). Liaise with WB operations TTLs and other active development partners; 6. Procurement of support arrangements (consultancies, facilitators, finance) made available to current case study and new countries. Liaise with WB operations TTLs and other active development partners; 7. Poverty - Transport strategy analyses undertaken in "x" new countries, and follow-up work in 3 original case-study countries; 8. Coordination arrangements between all participating countries and other partners put in place

Who:

1. Lead case-study consultant; 2. Program management; 3. Program management, case-study country representatives, World Bank and external specialists, case study coordinator, facilitator; 4. Program management, case study country representatives, coordinating consultant; 5. Program management, coordinating consultant, member countries, WB TTLs, donors; 6. Program management, coordinating consultant, designated member countries, WB TTLs, donors; 7. Designated member countries, local facilitators, coordinating consultant; 8. Program management, coordinating consultant, REC task Force, member countries Where: When

1. Lead case-study consultant home office; 1. Q3 2003 2. Washington DC; 2. Q3 2003 3. Brussels; 3. Q3 2003 4. Brussels, Washington, SSA; 4. Q4 2003 5. Washington, SSA; 5. Q42003 6. Washington, SSA; 6. Ql 2004 7. SSA 7. Q1 - Q4 2004 8. SSA 8. Q3 2003-Q4 2004

How Much:

N/A