Fragmented Levies Create Costly Obstacles

The joint assessment highlights that a fragmented and unpredictable system of county-level levies is a primary driver of increased transport costs. Transporters face a barrage of inconsistent charges for licensing, parking, and weighbridges, which are imposed independently by various county governments. This creates a difficult operating environment, particularly for small and medium-sized enterprises, and discourages new entrants into the sector.

These concerns were amplified in an August 2025 petition by the Kenya Transporters Association (KTA) to President William Ruto. The KTA identified at least seven counties—including Kajiado, Machakos, Kilifi, and Kwale—for imposing what it termed "unlawful and unconstitutional" fees. These charges range from KSh 500 for "border entry" to KSh 30,000 for non-compliance with truck registration rules, often levied on vehicles merely transiting on national highways without stopping or using county services. The KTA stated that some counties misuse branding and distribution permit laws, demanding annual fees between KSh 60,000 and KSh 150,000 per truck for even one-off deliveries. This situation echoes unresolved concerns raised by the Kenya National Chamber of Commerce and Industry (KNCCI) as far back as 2019 regarding the negative impact of multiple county levies on business.

Cabotage Rules Undermine Regional Integration

The report also scrutinizes Kenya's restrictive cabotage regulations, which govern the transport of domestic cargo by foreign haulers. Cabotage is defined as the right to operate transport services within a particular territory. Kenya's current rules largely prohibit foreign trucks from carrying goods between two points within the country, forcing many to make return journeys empty after delivering transit cargo from the Port of Mombasa to neighbouring countries like Uganda, Rwanda, and South Sudan.

This forced inefficiency leads to wasted capacity and significantly inflates the overall cost of freight, as transporters must factor the empty return leg into their pricing for the initial delivery. While the Treaty for the Establishment of the East African Community provides a framework for cooperation and integration, including the harmonisation of transport policies, Kenya's rules remain among the most restrictive in the region. This protectionist stance not only raises costs but also directly contradicts the goals of the EAC's common market and customs union protocols, which aim to facilitate the free movement of goods.

Economic Implications for Kenya and East Africa

The combined effect of these levies and restrictions poses a significant threat to Kenya's long-held position as the dominant logistics hub for East Africa. The Northern Corridor, which runs from the Port of Mombasa through Kenya to the hinterland, faces increasing competition from the Central Corridor, originating from Tanzania's Port of Dar es Salaam. While the Northern Corridor has historically benefited from a more efficient port and better road infrastructure, Tanzania has been actively upgrading its facilities. The non-tariff barriers created by Kenya's county levies and cabotage rules risk making the Central Corridor a more attractive, predictable, and cost-effective option for regional importers and exporters.

Ultimately, the increased operational costs are passed down to consumers, resulting in higher prices for essential goods and services. The report, titled "From Barriers to Bridges," suggests that comprehensive, pro-competition reforms could boost Kenya's annual GDP by as much as 1.4 percent and help create over 400,000 jobs.

Pathways to Reform

To address these challenges, the World Bank and CAK report calls for a two-pronged approach. First, it recommends urgent and stronger coordination between the National Transport and Safety Authority (NTSA) and county governments to harmonise all transport-related levies. The goal is to create a transparent, predictable, and unified fee structure that eliminates duplication and ensures charges are only for services rendered, in line with Article 209(5) of the Constitution.

Second, the report advocates for a comprehensive review and relaxation of Kenya's road transport cabotage rules. Easing these restrictions would allow foreign trucks to carry domestic cargo, reducing empty return trips, lowering freight costs, and improving overall logistical efficiency across the East African Community. Such reforms, the report concludes, are critical for lowering the cost of living, enhancing the competitiveness of Kenyan businesses, and cementing the nation's role as a leader in regional trade and transport.