PUBLISHED ON March 9th, 2015

TradeMark loosens up EAC bottlenecks

NAIROBI, Kenya – Sitting in truck laden with parts of an oil rig, driver Opira Robinson, 45, rests his head on the steering wheel patiently waiting for customs clearing at Lungalunga, a Kenya-Tanzania border post in Kwale, about 101 kilometres south of Mombasa on the East African coast.

He is moving the big rig from Pakwach in Northern Uganda heading for Tanzania’s coast.

“I can’t wait to get out of here,” Opira says. “It took me a few hours to cross Malaba, but now I have been here two days already and it might take me two more weeks,” Opira said.

At least 50 trucks cross through daily, according to Patrick Omare, the Kenya Customs station officer.

The main commodities are Kenyan fruits and wheat exports – timber and maize imports from Tanzania. There is also Malawian tea headed for the Mombasa Tea Auction and some Zambian copper also going through the crossing.

It is among 35 One-Stop-Border- Posts (OSBPs) that are under construction across the East African Community.

The intention is to reduce delays and ensure faster cargo movement across the region. Money is being provided by the World Bank, African Development Bank and the Japan International Co-operation Agency.

According to trade facilitation agency, Trademark East Africa (TMA) which is overseeing the posts.

“They are aimed at reducing delays by allowing struck carrying goods to stop once, not twice,” said Frank Matsaert, the TMA Chief Executive Officer in an e-mail response to questions said. “Officials will share facilities on the incoming or exiting side of the border. It is an Integrated Border Management process streamlined and electronic systems set up to allow faster border clearance.”

“It is to ensure seamless border operations that do not involve separate agencies duplicating roles,” Kenya Deputy Commissioner for Domestic Taxes, Humphrey Mugambi said in an interview recently.

“Declarations will be cleared jointly to avoid delays, we are looking at two hours for borders like Lungalunga,” Mugambi said.

“Most importantly is the streamlining of ICT systems so that declarations can be cleared faster even before a truck reaches the border, we have been doing that in Malaba and Busia,” he said.

Mugambi said enabling laws are in place so border points like Lungalunga will be operational by April.

Transport accounts for as much as 45% of business costs in East Africa, according to the Shipping Council of East Africa.

“The costs even increase as you go further inland to Burundi and Rwanda due to border delays among other issues,” Gilbert Langat, CEO of Shipping Council of East Africa said.

“Traders avoid formal border points, opting for illegal ones because of the fear for delays and harassment, it will boost trade as businesses understand the concept is to facilitate them move cargo faster,” Langat said.

At Malaba, along Kenya-Uganda border, pilot projects have been running which have reduced truck clearing time from three days to about three hours, according to TMA.

“The targets of these efforts are to reduce time through borders by at least 30%, unleashing important time and cost savings for businesses in East Africa,” Mastaert said.

TMA which is channelling funding of $117,734,000 to 13 of the border posts, said they estimate that just 15% reduction in border clearance time will save $17 billion over a 20- year period.

“Overall, the value of intra-trade in EAC is on an upward trajectory. Clearly the impact return will increase with time,” Mastaert said.

GDP growth for is expected to increase across the EAC with Tanzania at 7.2%, 6.7% for Rwanda and Burundi while Uganda and Kenya will grow at 6.3 % and 6.2 % respectively.

This is driven by among other things, increased investment on national and regional infrastructure, increasing FDI inflows, buoyant agricultural and services sectors, according to the International Monetary Fund.

EAC trade increased from $2,244.2 million in 2005 to $ 5,764.6 million in 2013.

Exports increased from $1,288 million in 2005 to $2,746.9 million in 2013. Imports increased from $ 955.5 million to $3,017.7 during the same period, according to Trademark East Africa.

Source: Business Week

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.