Discussion Paper No. 101 of 2009 on Performance of the Mombasa Port: An Empirical Analysis

Abstract

Although the performance of the port of Mombasa has been an issue of public interest, there has not been any empirical study focusing on it over time. This study estimates the Total Factor Productivity (TFP) of the port as a measure of performance using annual time series data from 1978 to 2007 of cargo throughput as the output, and labour and capital as inputs from various statistical abstracts. Results show a general increase in productivity, an indication of increased port performance. However, this is accompanied by decreasing returns to scale. A PESTEL analysis and a correlation test indicated a relationship between the port’s TFP and GDP per capital, exchange rate depreciation and politics; an indication of the impact of the macro-economy on port performance. The study recommends development of another port to deal with the decreasing returns to scale in the long run, incentives to encourage ship arrivals to improve the port performance, development of an economically active hinterland and other modes of transport such as road and railway and trade facilities in tandem, so as to ensure seamless movement of cargo to retain high frequency of ship and cargo arrivals.