Deputy Foreign Affairs Minister has said the governments of Uganda and Kenya have removed certain trade barriers impeding the flow of commodities into landlocked South Sudan. The hurdles include the compulsory Covid-19 retest of truck drivers imposed by the Ugandan authorities – and the electronic cargo tracking deal a Juba-based company, K-Polygone SAS extended to Uganda’s IVESCO Uganda Limited. More than a week ago, regional truck drivers protested against Ugandan authorities for imposing a compulsory second test for Covid-19 despite having taken the booster from one’s country of origin. The move caused shortages of goods including fuel in Uganda as truck drivers parked at the Malaba and Busia entry points to Uganda for several days. This reportedly led to a shoot-up in commodity prices there with South Sudan being affected as well. Deputy Foreign Affair Minister, Deng Dau says he met with Kenyan Ministers of Transport and Trade before traveling to Kampala, Uganda on Thursday to resolve the matter. “With our meeting the government of Uganda, that thing was resolved. And that all the truck drivers tested in one country are allowed, and the testing can last up to 14 days,” Deng said. According to him, more than one thousand trucks destined for South Sudan left Malaba and Bussia on Friday. Praising the move, Dau said “I’m happy to report that the governments of Kenya and Uganda are both supportive … And yesterday about 1026 trucks have left.” Concerning the electronic cargo tracking deal the Trade and Industry Ministry and...

Afreximbank in partnership with the AfCFTA Secretariat have launched the Pan-African Payment and Settlement System (PAPSS). The launch of PAPPS aims to boost intra-African trade by transforming and facilitating payment, clearing and settlement for cross-border trade across Africa. The platform is also expected to save Africa more than Ksh. 567 billion (USD 5 billion) annually in payment transaction costs, underpinning the operationalization of the AfCFTA. According to Afreximbank, PAPSS provides the solution to the disconnected and fragmented nature of payment and settlement systems that have long impeded intra-African trade. Prior to PAPSS, over 80% of African cross-border payment transactions originating from African banks had to be routed offshore for clearing and settlement using international banking relationships. That process posed multiple challenges including payment delays to operational inefficiencies and compliance concerns for the disparate regional payment systems. PAPSS, which has been successfully piloted in the six countries of the West African Monetary Zone, delivers among others, the following benefits. Reducing the cost, duration and time variability of cross-border payments across Africa. Decreasing the liquidity requirements of commercial banks for cross-border payments. Strengthening oversight of cross-border payment systems by central banks. Speaking at the launch event, Ghanian President Nana Akufo-Addo complimented Afreximbank and AfCFTA Secretariat for the establishment of the payment system saying, “This launch is a result of many months of hard work, resolve and commitment towards achieving set objectives for the growth of the continent in trade. All Central Banks in Africa must now join up and ensure seamless transfer of...

A truck pile-up has started to build along the Kenyan borders with Uganda following Kampala’s call for mandatory testing of all drivers at border crossing points, even as transporters threatened to suspend haulage of cargo through the Northern Corridor if the issues is not addressed. Uganda directed mandatory Covid-19 testing of all incoming travellers, including truck drivers, on December 20 last year. As a result, long queues have been reported all the way from Amagoro in Kenya, a few kilometres from the Malaba border post, since January 1. “I did Covid-19 test at Inland Container Depot in Nairobi and I have a valid certificate which is still valid for seven days. Why am I forced to get tested again?” asked Mohammed Mahmud, a truck driver. The new directive by Uganda authorities proposed the review of the Regional Electronic Cargo and Drivers Tracking System (RECDTS), which allows Covid-19 testing after 14 days, to a shorter duration of 7 days, due to the high transmissibility of the Omicron variant, which has a shorter incubation period. Due to ongoing trade barriers, Kenya Transporters Association (KTA) has threatened to suspend hauling of cargo until the Ugandan government reconsiders its new directive. “We are urging Ugandan authorities to consider the new directive and drop the $30 charge per test, which is an additional cost since in the other East African Community (EAC) states, Covid-19 tests are carried out free of charge. We also want clarification of how frequently the test will be carried out and their duration,”...

Summary The $29 million Gulu Logistics Hub aims to lower transport costs and trade barriers faced by Ugandan traders who export goods to the two countries. The new facility will provide container and break-bulk, handling and storage facilities — including bonded and non-bonded warehouses — as well as provide space for stakeholders dealing with freight transport. Ugandan transporters who ply the Gulu-Juba route are optimistic that the hub will increase their profits due to significant reduction in the distance and time their trucks spend on the road. More than a decade ago, Gulu was a no-go area, thanks to the Joseph Kony-led Lord’s Resistance Army rebels, who were fighting the government then. Fast forward to 2022 and the town has risen from the rubble, emerging as a key business point between Uganda and South Sudan. Its latest logistics hub, which will link Uganda, Kenya, South Sudan and the Democratic Republic of Congo, is a testament to its changing fortunes. The $29 million Gulu Logistics Hub aims to lower transport costs and trade barriers faced by Ugandan traders who export goods to the two countries. The new facility will provide container and break-bulk, handling and storage facilities — including bonded and non-bonded warehouses — as well as provide space for stakeholders dealing with freight transport. Ugandan transporters who ply the Gulu-Juba route are optimistic that the hub will increase their profits due to significant reduction in the distance and time their trucks spend on the road. “This logistics hub will be...

Summary The AfCFTA is a flagship project of the African Union (AU) Agenda 2063, Africa’s long-term development strategy for transforming the continent into a global powerhouse of the future. The African Continental Free Trade Area is the world’s largest free trade area, and the largest trade organisation since the establishment of the World Trade Organisation, bringing together 54 countries of the African Union and eight regional economic communities to create a single market. It has a population of about 1.3 billion people and a combined GDP of about $3.4 trillion. In addition to being a free trade area, the AfCFTA is a flagship project of the African Union (AU) Agenda 2063, Africa’s long-term development strategy for transforming the continent into a global powerhouse of the future. The agreement establishing the AfCFTA was signed in Kigali, Rwanda, on March 21, 2018 by 44 AU member states. Ten more countries have since signed the pact. The AfCFTA Agreement entered into force on May 30, 2019, 30 days after the deposit of the 22nd instrument of ratification, as specified in its Article 23. Trading under the AfCFTA started on January 1, 2021. Opportunities The AfCFTA market comes with many opportunities, some of which are highlight in this article. Consumer welfare gains: Consumers will have limitless choice of quality products at an affordable price. This is due to the fact that AfCFTA aims at eliminating import duties on products that are produced within Africa and thus satisfy the rules of origin. It also defines standards...

Established in 2018, the African Continental Free Trade Area (AfCFTA) represents perhaps Africa’s biggest opportunity for the next few decades in its battle against poverty of all forms; energy and infrastructure included. Against the backdrop of the tens of millions of Africans that have been plunged into extreme poverty by the onslaught of the covid-19 Pandemic, a strong case must be made for a speedy implementation of the African Continental Free Trade Area. It is projected that under the AfCFTA, extreme poverty will significantly decline across the continent. West Africa, for instance, would witness the biggest decline in the number of people living in extreme poverty; namely a decline of approximately 12 million people, which is more than a third of the total for all of Africa. But beyond extreme poverty eradication, it’s about time that the true economic might of Africa is realised through intra-African trade. Compared with Asia and Europe with 59% and 68% intra-continental trade, only 17% of exports from African countries are intra-continental (World Economic Forum), due to age-long tariff and non-tariff barriers, which the AfCFTA is essentially established to eliminate. The fact that intra-African trade constitutes only about 2% of global trade means there are significant gains to be realised if the AfCFTA is properly implemented. A continent that controls vast resources and a 1.2 billion-strong consumer market should be an economic no-brainer of a success, especially considering its young burgeoning and vibrant population. The African socio-economic and political construct under the AfCFTA dispensation must...

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. About the author: Ratnakar Adhikari, Executive Director, Enhanced Integrated Framework (EIF) & Taffere Tesfachew, Acting Managing Director, UN Technology Bank for Least Developed Countries Limited use of technology is inhibiting LDCs’ path towards structural transformation. These countries can implement measures in several areas to build their technological capacity. Innovative approaches to resource mobilization should be explored to fund such transition. Structural transformation is the process of moving resources from low productivity to higher productivity and skill-intensive sectors, thereby setting development and economic catch-up into motion. While many countries have achieved structural transformation in a matter of decades, the least developed countries (LDCs) have been notoriously slow in this respect. One of the factors for this lack of structural transformation is LDCs’ overwhelming dependence on commodities for production and exports. According to the United Nations Conference on Trade and Development’s Commodities and Development Report 2021, over 75% of African LDCs depend on commodity production for over half of their export earnings, though Asian LDCs have a relatively diversified export basket. The report also suggests that it is extremely challenging to move away from the trap of commodity dependence and attain structural transformation. Fortunately, a combination of technology and global integration can help countries on this path. When it comes to technological advancement and its effective use, the LDCs are at the lower end of the ladder. According to the World Intellectual Property Organization (WIPO)’s Global Innovation Index 2021, which monitors the state of technological...

East African Community Headquarters, Arusha, Tanzania, 15th January, 2022: The Republic of Uganda has agreed to double the number of health officers at the Busia and Malaba borders posts, from 50 to 100, as part of efforts to clear the backlog of trucks at the border posts. The Republic of Kenya, on her part, informed the 3rd Joint Multi-Sectoral Virtual Meeting of Ministers of EAC Affairs, Health and Transport held on Friday of the availability of sufficient Covid-19 rapid diagnostic test (RDT) kits and staff to support Uganda in Covid-19 testing at the border posts. Kenya affirmed readiness to immediately deploy 15 or more health workers and provide RDT test kits to enhance Covid-19 testing at Malaba and Busia border posts. Uganda also committed to recognizing the Covid-19 test certificate that shall be issued by Kenya’s Ministry of Health with a validity period of 72 hours using either PCR or RDT testing protocols. The meeting that was chaired by Kenya’s Cabinet Secretary for EAC and Regional Development, Hon. Adan Mohamed underscored the need to minimize administrative delays to enhance rapid clearance of the existing backlog at Malaba and Busia borders. They noted that the current trend of clearing truck drivers was not sufficient to clear the truck backlog. The Cabinet Secretaries/Ministers commended the Republic of Uganda for progress made in implementing the directives made on 10th January, 2022 and urged Uganda to increase her capacity of testing truck drivers to facilitate faster clearance of goods. The meeting urged the Republic of Kenya to support the...

While generally acceptable to the URA that transportation income by non-resident transporters is chargeable to tax in Uganda to the extent the outbound delivery of cargo commences from Uganda, the URA also seeks to tax non-resident transporters freight income on the inbound delivery of cargo from abroad. 1. Introduction In March 2021, Uganda’s Tax Appeals Tribunal (“Tribunal”) ruled in favor of the Uganda Revenue Authority (“URA”) collecting withholding tax (“WHT”) at the rate of 15% on freight payments to non-resident transporters for cargo deliveries into Uganda from abroad. Though this decision did not initially attract much public attention, there are now growing concerns especially as Uganda gears up for the development phase of its crude oil discoveries that the prevalent enforcement of this WHT imposition will make Uganda a less competitive destination for doing business as this article highlights. 2. Contention with the law The decision of the Tribunal notwithstanding, it is still far from settled whether WHT should apply on freight payments to non-resident transporters with both the taxpayers and the URA holding starkly divergent positions. The taxpayers argue that there are specific provisions under section 86 of the Income Tax Act (“ITA”) that deal with the taxation of non-resident transporters in Uganda. Pursuant to section 86 of the ITA, transportation income earned by non-resident transporters is subject to taxation in Uganda via the withholding tax mechanism only if it relates to the delivery of cargo that has embarked, boarded or originated from Uganda. By implication, therefore, it is...

Ultimately, though, the only way to defeat poverty and graduate from aid is greatly to increase Foreign Direct Investment (FDI) – of which there is a vast potential reservoir in the world looking for the right destination, writes Peter Fabricius from the Institute for Security Studies (ISS). Ultimately, though, the only way to defeat poverty and graduate from aid is greatly to increase Foreign Direct Investment (FDI) – of which there is a vast potential reservoir in the world looking for the right destination, writes Peter Fabricius from the Institute for Security Studies (ISS). Aid remains among the most important elements of the relationship between the developed world and Africa’s least developed countries (LDCs) in particular. Africa has received more aid than any other region, an accumulated total of more than US$2,4 trillion between 1960 and 2018, according to Jakkie Cilliers in his book The Future of Africa. Yet many observers and analysts believe there has been precious little to show for it. In her 2009 book Dead Aid; Why Aid Makes Things Worse and How There is an Another Way for Africa, the Zambian economist Dambisa Moyo, asked why, despite such large aid, most sub-Saharan countries still “flounder in a seemingly never-ending cycle of corruption, disease, poverty, and aid-dependency.” Her answer was that aid is inherently bad because it creates dependency by removing much of the incentive for African countries to fend for themselves – for example by improving their tax collection systems to earn their own government revenue. It is mostly paid...