The inauguration of a $3.2-billion Chinese-funded railway, linking the port of Mombasa to the Kenyan capital Nairobi with future extension to the border with Uganda, promises to be a game changer. But only if sticky issues, such as harmonization of procedures and charges, in East Africa are sorted out. Being part of China’s “One Belt, One Road” initiative that targets to upgrade maritime and land trade routes between China and Europe, Asia and Africa, the potential benefits of the railway are huge – not just for businesses in Kenya but the region as a whole. With offers of haulage charges of $0.08 per ton per kilometer on Kenya’s new standard gauge railway (SGR), there is hope for bigger returns for businesses. For years they have had to endure the pain of costly road transport and equally expensive and unreliable service on a dilapidated railway system built by British colonialists more than a century ago. “Today, the cost of transport along the northern corridor accounts for up to 45 percent of the goods and services in the region. The high costs make it hard for businesses to compete effectively on both the global and the local markets. We expect these costs to reduce significantly with the SGR,” the Kenya Private Sector Alliance (KEPSA) says. Industry estimates show that hauling a 40-foot container from the port of Mombasa to the Ugandan capital, Kampala, by truck costs about $3,030 exclusive of handling and clearing fees – which captures why businesses long for cheaper options,...

One way to speed up Africa’s economic transformation is through deeper trade integration. Official statistics put intra-African trade at a mere 13% of the continent’s total trade. That is abysmally low. Higher volumes of intra-African trade are essential so that African countries can do business with each other more frequently and with wider margins. The merits are clear. Firms and businesses are exposed to bigger markets, new opportunities, and a larger pool of capital (including human capital) – and, ultimately, grow their turnover and returns. Consumers buy from a wider variety of products and services at a relatively cheaper cost, and attain a higher consumer welfare status. Labour benefits from skills upgrades and attractive remuneration offered by trading firms. This sets in motion a chain of other economic activities that support and spin off from regional trade. Governments also reap rewards such as a positive balance of payments, a fiscal boost from a wider tax net, and more revenue to invest in public infrastructure. This is a standard international trade position applicable throughout the world; it is therefore not surprising that regional trade deals are a core strategy in countries’ economic policies. So why are intra-African trade volumes so low and, more importantly, how can we increase it? Is it a matter of wrong or ineffective policies? Or a lack of business activity in Africa to take advantage of regional markets and build intra-African trade? I believe it is more the former than the latter, and I will explain why in...

The British prime minister has announced a multi-million pound package of support for wealth creation in Africa. Theresa May unveiled the measures at the G20 submit in Hamburg on Saturday as she called for global action to unlock the untapped economic potential of the continent. The plans include £60m to support the ability of African nations integrate into global financial markets, paving the way for the City of London to work as a hub for African finance. A further £61m will be released to boost trade infrastructure in Tanzania – including working with the World Bank to nearly double the capacity of Dar es Salaam port. Somalia will receive £30m to build a functioning civil service as it recovers from conflict and neighboring Ethiopia will get £35m to attract investment. Rwanda is set to receive £11.8m for the same ends. May said: “We must not forget that progress in Africa benefits the UK at home. “Our international aid work is helping to build Britain’s trading partners of the future, creating real alternatives to mass migration, and enhancing our security, while simultaneously ensuring we abide by our moral responsibility to meet the immediate humanitarian needs of some of the poorest people on earth. “This is the future of aid, delivering value for money for the taxpayer.” The investment is aimed at tackling the issues in Africa that slow down the continent’s growth prospects such as poverty and natural disasters like drought. It’s also includes measures such as developing insurance systems to...

Efforts are underway to create a free trade area collectively called the African Continental Free Trade Area, covering half the African continent The signing of the tripartite free trade area agreement by South Africa in Kampala has injected fresh momentum into the tripartite negotiations to create a free trade area covering half of Africa. According to a statement from the Common Market for Eastern and Southern Africa (COMESA) secretariat, this brings the total number of countries that have signed to 19. A total of 14 ratifications are required for the Agreement to enter force. Efforts are underway to create a free trade area that covers the Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC) and East African Community (EAC), collectively called the African Continental Free Trade Area (CFTA), covering half the African continent. “South Africa signed the Agreement the very hour that the remaining three Annexes to the Tripartite Agreement were adopted by the Ministers following the conclusion of the ministerial meeting,” said the COMESA Director of Trade and Customs Dr. Francis Mangeni who was in the negotiating team. The meeting finalized and adopted the three remaining Annexes (on rules of origin, trade remedies and dispute settlement), thus producing the full Tripartite Agreement. While the main Agreement had been signed on 10 June 2015, six out of the 10 Annexes had by then been negotiated and cleaned up by the lawyers. Three Annexes, though negotiated, were yet to be scrubbed by the lawyers and were on...

The construction of the remaining section of the new Standard Gauge Railway, between the Kenyan Rift Valley, the border with Uganda and then on to Kampala, has come a step closer after the two partner countries have agreed to jointly source the financing for this project. One delegation made up by experts from both countries will travel to China together, or so it is understood, after consensus was reached between Kenya and Uganda that 80 percent of all inbound and outbound cargos will use the Northern Rail Corridor and the port of Mombasa. Feathers were ruffled a few months ago when Uganda pulled the almost certain routing of its oil export pipeline from a routing through Kenya and signed a firm agreement with Tanzania. The new pipeline routing will now circumnavigate Lake Victoria and then run in an almost straight line towards the port of Tanga which will be upgraded over the next two years to incorporate an oil loading facility. At the time did the future of the SGR railway look somewhat doubtful with some elements in Kenya pressing their government to terminate the SGR route at their designated new manufacturing zone in Naivasha but the latest agreements, in particular with the firm commitment to ship 80 percent of the cargo traffic to Mombasa and the joint finance sourcing, was this obstacle finally removed. There has not yet been a final decision on the route in Uganda between the border and Kampala but it is expected to be in...

More and more Kenyans are using the new standard gauge railway commuter services to visit the Coast. According to the Kenya Coast Tourist Association (KCTA) Acting chairman, Victor Shitakah, the number of upcountry holidaymakers visiting the Coast, especially during weekends, has been on the rise, thanks to the SGR. He encouraged more Kenyans to take advantage of the affordable train services to visit the region. "We are in an election year, but this does not mean that we discard what we are doing.                                   We hope that we shall conduct a peaceful election and allow Kenyans and visitors from outside our country to continue sampling the various attractions we have,'' Shitakah, the CEO of Kenya Safari Lodges and Hotels and president of Skal Kenya Coast, said at the weekend. August holidays He lauded the Kenya Tourism Board (KTB) for vigorously marketing the country's various tourism destinations. The hoteliers also appealed to Kenyans to take advantage of hotels' promotional offers. "We are appealing to Kenyans, especially in the coming August holidays, to take advantage of the SGR services and tour the coast," the Severin Sea Lodge sales and marketing manager, Caroline Ndirangu, said. The English Point sales account manager, Julia Karanja, said local visitors  account for 95 per cent of the total bed occupancy at the hotel. "We have witnessed positive increase in the number of the local tourists in our facility. We get a...

The Government has come up with a new national trade policy document as it seeks to align diverse sector policies towards growing exports. Through the document, developed by the State Department for Trade, the Government wants to strengthen domestic and international trade by supporting key sectors such as agriculture, industry, energy and the ‘blue economy’ - a new concept meaning the use of the sea and its resources for sustainable economic development. In line with this, the Ministry of Trade, Industry and Co-operatives will host a three-day event dubbed ‘Kenya Trade Week’ at Nairobi’s Kenyatta International Convention Centre. According to Trade Principal Secretary Chris Kiptoo, the event, themed ‘Transforming Kenya into a Competitive Export-led and Efficient Domestic Market,’ will see the launch of key documents to help support exports. KEY DOCUMENTS “We have had several key documents on trade, but have been operating in a disjointed manner. We shall use this forum to highlight what we have lined up to ensure that trade policies complement rather than compete with each other,” he said in an interview. The ministry hopes that by having a single document to address various trade policies such as exchange control, liberalisation and licensing, the country can have a robust domestic trade, which would in turn help support exports. To help grow exports, the State department wants to address all non-tariff barriers that exist between Kenya and its trade partners. This includes solving trade differences with countries such as Tanzania. KENYA’S EXPORTS According to Dr Kiptoo, about...

Arusha. The East African Court of Justice (EACJ) yesterday dismissed an application filed by a Tanzanian against the East African Community (EAC) member states signing the Economic Partnership Agreement (EPA) with the European Union (EU). The regional court refused to grant an order restraining four partner states, including Tanzania, which have not signed the EAC-EU-EPA trade arrangement from penning the deal. Equally, the court under the Deputy Principal Judge, Isaac Lenaola, failed to restrain Kenya and Rwanda, which had signed it, from continuing with the subsequent procedures. The court also refused to direct the seventh respondent, the EAC, in an application filed by Castro Pius Shirima, to withdraw forthwith from any negotiations initiated with the EU. Apart from Tanzania, three other countries which have declined to sign the EPA agreement are Uganda, Burundi and South Sudan. The latter joined the EAC only last year and was not involved in negotiations that date back to 2002. Kenya and Rwanda signed the deal in September last year, roughly around the time the negotiations were concluded. Kenya has even ratified it and has been pressing for fellow states in the bloc to follow suit. Mr Shirima had sought the court’s order that would bar the EAC member states and the secretary general of the community from signing the EPA deal on grounds that signing the agreement was in contravention of the EAC Treaty. He further argued that the EAC bloc would suffer considerably by nodding to EPA, noting that agriculture - the backbone...

Sugar imports in the first four months of the year rose 36 per cent compared with the same period last year as the government issued more licences to help bridge a deficit following low local supply. A report by the Sugar Directorate indicates the volume of imported sugar grew from 97,320 tonnes early last year to 131,846 tonnes from January to April this year. Kenya imported the sugar from the Common Market for Eastern and Southern Africa (Comesa) free trade bloc, the East African Community (EAC), and other countries. “Sugar imports in April comprised 14,742 tonnes table and 10,256 refined (industrial), Comesa gave 1,500 tonnes while EAC provided 2,550 tonnes, non-Comesa countries gave 6,332 tonnes,” says the report. The directorate notes that only one tonne of sugar was exported in April compared with 18 tonnes in the same period the previous year. “Overall sugar exported in January to April 2017 was 7.9 tonnes against 76 tonnes in the same period last year,” says the report. It notes that Madagascar, Mauritius, Uganda, Zimbabwe and Swaziland were the main sources of table sugar imports. Kenya produces 600,000 tonnes of sugar annually and relies on imports to meet growing demand that currently stands at 900,000 tonnes. The country is allowed to bring in 300,000 tonnes of taxless sugar every year from Comesa states. The directorate says in the period January to April 2017, production of the commodity dropped to 172,722 tonnes compared to 238,872 tonnes achieved in the same period last year. The...

Trade and Industry Minister Rob Davies will today leave for Uganda where he will attend the Tripartite Committee of Sectoral Ministers meeting. The meeting, which will be held in Kampala on Friday, will give the Ministers from the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), and Southern African Development Community (SADC) an opportunity to get an update on the progress achieved in the Tripartite Free Trade Area (TFTA) negotiations. The TFTA consists of 26 member states of the African Union. "The TFTA marks an important step in promoting regional integration in Africa and is a building block for the Continental Free Trade Area. The meeting is expected to consider the remaining annexes, thus marking the conclusion of the legal framework for trade in goods," said the Department of Trade and Industry. This will facilitate the signature of the agreement by all member states. Negotiations on tariffs, rules of origin and Phase II will continue as part of the built-in agenda. Minister Davies has said that considerable progress has been achieved in tariff negotiations between Southern African Customs Union (SACU) and the EAC and Egypt. According to Minister Davies, it is expected that SACU and the EAC will conclude the tariff negotiations in the near future. Launch of Microfinish Automotive Meanwhile, Trade and Industry Deputy Minister Bulelani Magwanishe will on Friday launch the multi-million black industrialist firm, Microfinish Automotive in Pinetown, KwaZulu-Natal. Microfinish, which is an automotive valve guide and valve seat manufacturer, was approved for...