In a bid to facilitate the recovery of struggling economies across the region, the East African Business Council (EABC) is rallying its member states to reopen the regional airspace that was closed due to the coronavirus pandemic. This, experts argue will among other factors kick start trade, tourism and hospitality sectors. EABC has commended the public health measures aimed at containing the spread of Covid-19, but further noted it was time to reopen the skies. “Air travel is vital to the economic health of countries,” Regional Director for Africa Dr. Matshidiso Moeti said in a statement. Besides Dr. Moeti pointed out, “The resumption of commercial flights in Africa will facilitate the delivery of crucial supplies such as testing kits, personal protective equipment and other essential health commodities to areas which need them most,” Additionally, “This is vital for the recovery of the aviation sector in light of the Covid-19 pandemic,” the statement adds The regional body also indicated that member states “need to come up with regional coordinated guidelines and measures on the opening of the regional aviation sector to bolster consumer confidence and support the recovery of the sector.” Experts who talked to this paper, including Col Silas Udahemuka, the Director-General Rwanda Civil Aviation Authority (RCAA) backed the proposal. For instance, according to Robert Rukundo chairman of the Rwanda Horticulture Exports Association, opening up the airspace will allow for resumption of employment in sectors such as tourism. “I fully support the idea because it will also boost the regional...

Delays in cargo clearance at the Nairobi Inland Container Depot (ICD) have increased the cost of importing cargo. A survey by the Shippers Council of Eastern Africa (SCEA) reveals that only 40% of cargo is cleared within the 4-day free storage period, leaving 60% of the cargo to incur storage costs between KSh 3210 and KSh 9630 per day for every container. A report by the Star shows that cargo clearance takes an average of 5-6 days, up from the previous 0-4 days within the free storage period. By last week, 1774 Twenty-Foot Equivalent Units (TEUs) exceeded the 21-day stay at the facility. This is beyond the four-day free storage period, and the 17 days charged stay, after which KRA takes custody of the cargo. Under KRA custody, importers have to pay the rent for Custom warehouses, failure to which the agency auctions goods to recover costs. The Federation of East African Freight Forwarders Association (FEAFFA) says that the volume of cargo that has overstayed for between 21-120 days grew by 9% to 581 twenty-four foot equivalent containers from last week’s 531. Cargo Clearance is Taking a Toll from the Pandemic Restrictions due to the pandemic have reduced the available staff for cargo clearance and moved some clearance functions online. This has impeded processes like verification and release, which cannot happen online. Further, clearance agents now require prior permission to access KPA and KRA facilities to solve clearance related problems, which fuels delays. Working online also affected the timely delivery of actions...

In Summary The commodity traded at $1.81 (Sh193.85) last week. The tea sector is grappling with oversupply owing to prolonged rainfalls in tea growing areas in the country. Tea prices this week fell to the lowest mark this year at the Mombasa auction, as demand for the commodity recorded mixed performances in the export markets. A kilo averaged $1.73 (Sh185.28), down from $1.81 (Sh193.85 ) last week, amid an increase in volumes traded at the weekly auction. The volumes traded went up to above 10 million kilos compared to 9.7 million kilos last week. “The total volume traded for Sale 27 was 318,729 Kilos more than Sale 26,” the East African Tea Trade Association (EATTA) says in its weekly report. Out of 192,080 packages (12,649,027.50 kilos) available for sale, 151,741 packages (10,011,700 kgs) were sold. 21 per cent packages remained unsold, EATTA notes. Kazakhstan, other CIS nations, Sudan, Afghanistan and Bazaar showed more interest. Yemen, other Middle Eastern Countries and Egyptian Packers were active but at lower levels while UK and Russia were selective. “There was reduced activity from Pakistan Packers with some selective interest from Iran. Local Packers were active in line with price. Somalia were active at the lower end of the market,” EATTA Managing Director Edward Mudibo said. This is a new low mark this year. The commodity had traded at $1.78 (Sh190.64 ) for three consecutive weeks, which was the lowest this year, before picking to Sh193 last week. The highest price remains in the first week of January when the auction opened with an average...

In summary New import tax changes for the current fiscal year are effective July 1. The decisions to stay application of the EAC CET rate and apply a higher duty rate are aimed at stimulating local production and safeguarding markets against cheap imports. The import duty measures in the EAC Gazette issued on June 30 can be put into three main categories which are Duty Remission for Industrial Inputs, Stays of Application, and Amendments of the East African Community Customs Management Act, 2004. The duty remission measures adopted by the EAC Partner States will ensure that local manufacturers can import raw materials and inputs which are not available in the region at a lower rate. Kenya could ramp up its growth plan for the year after East African Community (EAC) member-States sanctioned new taxation measures aimed at protecting local industries from unfair competition. The economy has been on a strict diet of austerity measures that curbed spending and lowered taxes in the wake of the coronavirus pandemic. Gloom has brought with it pay cuts and job losses and as a result local industries have been hit hard. But the new move by the bloc seeks to offer a lasting redemption package to the struggling industries after new import tax changes on the bloc’s Common External Tariff (CET) were announced last week and will take effect on July 1 following a ratification agreement signed during the pre-budget consultations by member State’s representatives. Ministers from EAC held Pre-Budget Consultations prior to reading of...

Dar es Salaam — Tanzania's economy is forecast to grow at 5.2 percent this year, while six Eastern African countries' economies are projected to plunge into recession, blaming the trend on the Covid-19 pandemic, a new report shows. The new projection by the African Development Bank (AfDB) is lower than the 6.4 percent it projected before the pandemic. Tanzania's growth will beat 12 other Eastern African countries in 2020, according to the report. The government predicts the economy will grow by 5.5 percent this year, while the World Bank projects it to slow to 2.5 percent. The six countries which are projected to go into recession in 2020 are Seychelles (-10.5), Sudan (-7.2), Burundi (-5.2), Somalia (-3.3), Comoros (-1.2) and South Sudan (-0.4). The other six countries will grow economically - but doing so at arelatively lower rate than Tanzania. The countries (with their growth rate percentages in brackets) are Rwanda (4.2), Ethiopia (3.1), Uganda (2.5), Kenya (1.4), Djibouti (1) and Eritrea (0.3). "Despite the projected slowdown, real GDP growth in Tanzania will benefit from increased prices of gold, a major national export," reads the report in part. Gold is Tanzania's leading foreign exchange earner after overtaking tourism this May, largely due to increased prices and production volumes. Gold reached above $1,800 an ounce Wednesday for the first time since 2011, with the precious metal benefitting from its 'safe haven' status as the coronavirus outbreak triggered global economy fears. Gold price was $1,257.35 in May 2019. The price surge partly...

Cross-border travel after COVID must be safe and predictable and shouldn’t require excess disclosure of personal health information. Developing such crossing experiences will take cooperation between the health sector as well as aviation, travel and tourism sector stakeholders. Timing is of the essence to prevent further harm to economies and make travelers comfortable with travel. When the six nations of the East African Community opened to essential trade in June, COVID-19 testing created kilometers of backed up trucks along the borders as truck drivers waited for hours to get test results. By working together to share test results in a harmonized system, border crossing and regional integration was later accelerated within East Africa. We need this kind of coordination and harmonization on a global scale. Unfortunately, that is not the current trajectory of COVID-19 era border crossing. COVID brought a patchwork of closed borders and complex border entry requirements as reopening countries attempted to balance the urgent need to restart travel and cross-border economic activity against the imperative of protecting their population’s health. Such disparate efforts are slowing travel and halting a range of industries such as tourism. Without intervention, these efforts will lead to fragmented policies and procedures and make international travel confusing and uncertain long into the future. Image: IATA The need: Safe, dynamic borders that respect private data For cross-border traffic to resume fully, travelers need border crossing experiences that are safe, predictable and do not require excess disclosure of personal health information. Such policies are not universally in place....

COVID-19 curbs East Africa’s growth, but still the strongest in the continent Report calls for transition to higher value-added activities to build resilience to shocks Economic disruption caused by the COVID-19 pandemic has pushed East Africa’s growth projection for 2020 down to 1.2 percent, a rate that outstrips other African regions and is forecast to rebound to 3.7 percent in 2021, according to the African Development Bank’s East Africa Regional Economic Outlook 2020. The projection is under the baseline scenario that assumes the virus is contained by the third quarter of this year. Prior to the COVID-19 pandemic, the region’s economic growth was projected at more than 5 percent, well above continent’s average of 3.3 percent and global average of 2.9 percent. However, COVID-19-induced shocks and a locust invasion have contributed to job losses, increased humanitarian needs and will aggravate poverty and income inequality. In the worse-case scenario, in which the pandemic persists until the end of 2020, growth is projected at 0.2 percent, still above Africa’s predicted average of -1.7 percent and -3.4 percent under the two scenarios. At the launch of the report held in Nairobi on Wednesday, Simon Kiprono Chelugui, Cabinet Secretary of Kenya’s Ministry of Labour, said East African countries could overcome the effects of COVID-19 and turn their economies around by mitigating the external and domestic risks. “We need to implement a decisive and coordinated response to contain the spread of COVID-19; mitigate its health and socio-economic effects; accelerate structural transformation; improve the investment climate,...

In Summary •60% of cargo attracting storage charges as a result of delays clearing processes. •Delays blamed on reduced operating capacity by government agencies and restrictions to access the facility in wake of Covid-19. Importers and clearing agents are worried delays in cargo clearance at the Inland Container Depot-Nairobi are increasing the cost of doing business even as Covid-19 continues to negatively impact trade. Only 40 per cent of cargo is cleared within the four-days free storage period, the Shippers Council of Eastern Africa (SCEA) has said. The remaining 60 per cent incur storage charges of between $30 (Sh 3,213) and $90 (Sh9,639) per day, per container, adding to the cost of import and last-mile transportation. According to a survey by the shippers council, ICD Nairobi performance in import logistics efficiency deteriorated between January and May. This was as a result of reduced operations by most senior personnel of Kenya Ports Authority(KPA), Kenya Revenue Authority(KRA), and other government agencies, who are partly operating from home and office. This has affected decision making, SCEA notes in its report. There is also a reduced number of middle and junior officers to process cargo with partly the same customs cargo clearance framework and partly online process. “Customs clearance of cargo requires physical interaction either for verification or release hence certain customs functions could not be performed with remote control,” SCEA chief executive Gilbert Langat notes. Clearing agents are also not allowed to access offices of KPA, KRA, and other government agencies to solve...

President Paul Kagame has spoken out on trade and cross border cargo movement that Rwanda is currently experiencing noting Rwanda’s readiness to engage neighbours in search of a solution. The President was speaking Friday July 10 during a broadcasted live Instagram session with social media influencers and a section of local media which focused on Rwanda’s 26-year journey after liberation. Commenting on the status of regional trade and cross border movement of goods, the Head of State said that there were challenges in movement of goods into and out of the country occasioned by challenges of cooperation by regional countries. He said that in recent weeks, there were false reports in a section of media outlets alluding that cross border truck drivers entering the country were being harassed and mistreated. Noting that the statements were not true, Kagame said that Rwanda was keen on conducting tests for truck drivers as had been previously agreed by the East African Community. “I have seen in the media false reports that truck drivers entering Rwanda have been harassed and mistreated. That isn't true. What we do is test truck drivers entering for Covid-19 and that's what we agreed in the EAC,” he said. In May, four East AfricanCommunity (EAC) leaders convened a virtual summit whereby the resolutions included testing of truck drivers entering countries to reduce vulnerability to the pandemic. Testing, tracing and isolation of infected personnel was agreed upon as a key way to ensure that supply chains and movement of goods is maintained amidst the pandemic to...

The Kenya Revenue Authority is embroiled in a legal battle with vendors of electronic cargo tracking systems, who have sued the taxman to block its control of the system meant to tame tax evasion. A petition filed on behalf of the vendors by activist Okiya Omtatah wants the court to stop the authority from taking over management of cargo tracking services, which they have been running since 2006. The taxman has accused vendors of colluding with cargo owners to dump goods in the local market. The petition 113 of 2020 before the High Court in Nairobi is the second in the battle to keep the tracking of transit cargo business in the private firms after a similar one in 2017 was dismissed by the same court, with KRA now accusing the vendors of sneaking an appeal on the earlier petition they had lost. “The honourable court be pleased to issue an interim order suspending the Kenya Revenue Authority implementation of the KRA Regional Electronic Cargo Tracking system (RECTS) through the public notice issued on March 13 and the free use of the customs Electronic Cargo Tracking Seals acquired from BSmart technology Limited,” reads the petition in part. The vendors argue that the procurement of the system KRA is using in partnership with other East African revenue collection agencies was not competitively bided for and that the shift to the new system will ruin their businesses. The latest battle in court now prolongs KRA’s long journey to control transit cargo monitoring...