PUBLISHED ON September 15th, 2014

Non-tariff barriers found to hurt trade between EAC states

Non-tariff barriers within the East Africa region are affecting regional trade, according to a recent study conducted by a regional think-tank.

The East Africa Policy Centre, in its study released last month, noted formal and informal trade barriers remain major obstacles to economic growth and social development in the East African Community (EAC).

According to Executive Director Mike Rotich, high transportation costs due to corruption, bureaucratic delays and poor infrastructure are an impediment despite the measures put in place to drive business.

The study also notes that due to high costs of road transport within the region compared to shipping and air transport, only 23 per cent of EAC’s total exports and 10 per cent of imports are intra-regional.

“To transport a 20-tonne container from Mombasa to Nairobi costs $1,300, while a similar container from Mombasa to Kampala and Kigali costs $3,400 and $6,500 respectively. This is more than double the $1,200 one would incur to ship the same goods from Japan to Mombasa,” Rotich notes.

Apart from high road transport costs, overhead expenses such as bribes at border checkpoints and weighbridges incurred by transporters have also hindered the growth of regional trade.

“We found that other overheads and bribes account for almost 19 per cent of the companies’ total operation costs. Drivers who were interviewed claimed that many unexpected overcharges and bribes have to be paid at check points and weighbridges on the borders,” the study notes.

The study, which explored different factors affecting the trucking business in the East Africa region found out that 19 per cent of total operating costs for companies doing cross-border business goes into overhead expenses.

Source URL: Standard Digital

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