A Chinese-funded multibillion-dollar standard gauge railway project in East Africa is coming under fire for failing to meet the needs of the local communities it affects. The new network will sharply improve transportation links to key resource-rich areas in the region, helping to open up access to the world’s newest oil and gas discoveries, but local leaders are increasingly pushing the Asian nation to provide more of what local communities want: decent jobs and transparent deal-making. Once completed, the 2,935-kilometer network is expected to slash freight costs by more than 60%, boost regional trade and provide the first railway link to Uganda’s Lake Albertine Rift basin, believed to contain as much as 6.5 billion barrels of crude oil. But storm clouds are gathering over the project, with local communities in Uganda and Kenya increasingly questioning the bidding processes and demanding better jobs for local communities. “Contracts for the projects are shrouded in secrecy, this cannot be good for us as well as future generations” said Geofrey Ekanya, a member of the Ugandan parliament. “The Chinese are giving us cheap loans, but this should also translate into good jobs for our people.” Chinese Premier Li Keqiang signed the deal for the project with the leaders of Uganda, Kenya, South Sudan and Rwanda in May in the Kenyan capital Nairobi. Although the project is being undertaken by all the countries jointly, each nation has to individually agree financing arrangements for the section of the project in its territory. The agreement gave Chinese...

Bujumbura - The East African Community (EAC) private sector wants a speedy implementation of the World Trade Organisation’s (WTO) Trade Facilitation Agreement, saying it will reduce bottlenecks in the movement of goods in transit across the borders. Speaking at the third regional annual meeting of Promoting Agriculture-Climate-Trade linkages in the East African Community (PACT-EAC), which was organised by CUTS International Geneva in Bujumbura last week, Dickson Poloji, a policy analyst at the East African Business Council (EABC), said business players should be sensitised on the agreement and its benefits, especially on the need for a regional trade facilitation committee in the EAC. “The trade facilitation agreement is very crucial to us and good for the private sector. The EAC partner states are already implementing over 50 per cent of the agreement,” Poloji said. All WTO members agreed to the Trade Facilitation Agreement during the ninth WTO Ministerial Conference in Bali, Indonesia in 2013. It sets out provisions for expediting the movement, release and clearance of goods, including goods in transit and measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. Once implemented, it would speed up the transit of goods to and from landlocked Least developing countries (LLDCs) like Uganda, and reduce the costs involved. While addressing a UN conference on landlocked least developing countries in Vienna, Austria recently, the WTO secretary general, Roberto Azevedo, said LLDCs were vocal in negotiations on cutting red tape in customs and other border procedures during...

The construction of the $3.6b double-track standard gauge railway (1,435mm) linking Kenya’s Indian Ocean port city of Mombasa to the capital Nairobi could become an open door to Uganda’s economy. The standard gauge railway line, which is set to be completed in 2018 under a contract by China Roads and Bridges Company, which the Ministry of Transport and Infrastructure has focused efforts on designing, developing and maintaining a transport and infrastructure architecture that could facilitate sector growth and accelerate national economic development. According to the budget priorities for FY2014/15, the transport sector is a major priority which aims to pursue world class transportation systems for improved quality of life by ensuring the country is connected and served by an efficient, safe, accessible and sustainable transportation services. The new railway will supplement road transport, thereby increasing the efficiency of the Northern Corridor by providing gateway linking Kenya’s Maritime Port of Mombasa to the landlocked economies of Uganda, Rwanda, Burundi and South Sudan. It will significantly reduce the cost of road maintenance hence lowering the cost of doing business in the region thereby improving trade and attracting investments. The implementation of the SGR is expected to transform Uganda and the region for the better. An example of Kenya, to satisfy the growing demand for port services brought about by growing regional economies, they are developing a second commercial port at Lamu, under the LAPSSET project. For example, Mombasa Port, Lamu Port will be the beginning of a second transport and economic corridor...

The East African Community plans to allow bond sales across four markets in the bloc as investors look to fund projects such as railways that will link up the region. The framework will allow for the sale of “multi-jurisdictional, multi-currency” debt from within or outside the four-country group, Paul Muthaura, acting chief executive officer of the Capital Markets Authority in Kenya, the region’s biggest economy, said at a conference in Cape Town today. The group that also includes Uganda, Tanzania and Rwanda is set to expand 6 percent this year, faster than the sub-Saharan African average of 5.1 percent, according to the International Monetary Fund, as governments in the region invest in roads and energy projects. Kenya sold infrastructure bonds last month for the first time in a year. A railway linking Mombasa, Kenya with Kigali and Kampala is project that may be funded with debt, Muthaura said. Another is the Lamu Port and New Transport Corridor Development to Southern Sudan and Ethiopia project, which will include an oil pipeline and refinery, he said. ‘‘As we see many domestic issuers in any one of the EAC markets moving into the others, they want to be able to capital raise relevant to their pipeline of projects in different countries,’’ he said. One ‘‘regional entity’’ has been approved for a bond sale, Muthaura said, without giving details. ‘‘They’re just looking at the markets to find the right timing for the issuance,’’ he said. ‘‘There are ongoing engagements with other potential issuers. We’re...

Flower and fruit exporters breathed a sigh of relief after officials in Brussels gave them a reprieve from new taxes that they feared would deal a severe blow to the billion-dollar industries. The European Union signed a deal with the governments of Kenya, Uganda, Tanzania, Burundi and Rwanda that make up the East African Community (EAC), to have goods enter the prime EU market duty free. The signing of the Economic Partnership Agreements (EPAs) came after weeks of negotiations and a delay when Tanzania stalled on signing the trade deal with the EU. For the deal to work, it needed all five governments to sign the pact in unison by Sept. 30. Negotiations between the EU and the EAC have been ongoing for seven years. Tanzania finally agreed to sign in late October which means that flowers and fruit from Kigali to Kampala can now enter the EU market duty free within the next few months. Oct. 1 was supposed to to be the deadline for the Economic Partnership Agreements but without consensus, goods from the region were subject to taxes as high as 22 percent. The Kenya Flower Council, an industry lobby group, said that the industry was relieved since the taxes could have made local farmers go belly up, resulting in massive job losses. “Kenya flower industry was indeed in a crippling crisis,” Kenya Flower Council CEO Jane Ngigi told AFKInsider. In 2013 horticulture exports from Kenya raked in $1 billion, 95 percent of this coming from sales...

THE Tanzania Customs Integrated System (TANCIS) implemented early this year, has simplified the process of clearing import and export goods through port, airport and border posts in the country. Presenting a paper to delegates attending one day Shipping Industry Consultative Forum in Dar es Salaam on Tuesday, Tanzania Revenue Authority Senior Customs Officer, Mr Felix Tinkasimile said the new customs clearing system was simpler and more transparent. He said the TANCIS reduced the time to clear cargo by providing one platform where all stakeholders involved in the importation and exportation of goods could exchange necessary information. Importers and exporters were now able to submit all the necessary documentation through the platform and agencies involved in the goods clearing process then process them and issue the necessary permits and clearances. "Clearing agents no longer have to move from one office to another in the effort to get their documents cleared. Instead they are able to access TANCIS from the comfort of their own offices as long as they have access to the internet," he explained. Mr Tinkasimile said the system enables tracking of cargo when it arrives at the port, transported to Inland Container Depots (ICDs) and when it leaves for its final destination. "The system has removed delays or loss of containers or cargo and makes it easier to hold officers accountable if any mishandling or purposeful delays occur," he added. Although the TRA Senior Customs Officer did not have at hand figures of revenue collected since implementation of the...

VENTURES AFRICA – In recent times, there has been some ‘back and forth’ argument over the legality and long term usefulness of the Economic Partnership Agreement (EPA) between the European Union (EU) and several African states, according to the United Nations Economic Commission for Africa (UNECA). The EPA encourages African countries to open up to 83 percent of their markets to European imports while tariffs and fees are planned to be gradually eliminated. In exchange for this, African states are to receive customs-free access to the European market. While there may be some economic sense here, a number of African countries are not in support of the arrangement, the major concern being that they may lose their competitive trade advantage to European companies. Kenya was among the countries that refused to sign the deal, and it got significant import tariffs imposed on many of its products for that reason; this reportedly led to numerous layoffs in several African firms. Eventually the East African country caved in to the pressure two weeks ago and signed the trade agreement. This, in the opinion of a growing number of people, might just be called “economic bullying.” Notable EU officials have criticized this arrangement. One of such is German Chancellor Angela Merkel’s Africa Commissioner, Günter Nooke, who claims the EPA counteracts Europe’s development policy efforts. “Economic negotiations should not destroy what has been built up on the other side in the Development Ministry. Germany and Europe contribute large sums of tax money toward various...

VENTURES AFRICA – The United States is keen on boosting trade ties with East Africa and has launched a $65 million trade hub in Kenya to further such relations. Robert Godec, US Ambassador to Kenya, announced this on Monday at the opening of Origin Africa, a two-day textile industry trade fair in Nairobi. The trade hub will run under President Obama’s “Trade Africa” initiative, which was launched in July last year. It serves as a partnership between the United States and sub Saharan Africa aimed at growing regional and international trade between both regions. Godec said Kenya was selected because of its position as the region’s leading economy and its speedy implementation of productive trade policies. It is also home to promising local enterprises that are forming creative partnerships with multinational companies, a lot of which are US companies. Kenya’s President, Uhuru Kenyatta, said in a statement that “Kenya wants to be among the first movers in Africa by creating an enabling environment to attract investment (by foreigners and locals)”. The government has therefore organised a detailed programme to improve Kenya’s business sector and its standards in the global market . “This includes a 40-month programme to inject over 5,000MW of electricity into the National Grid and reduce the cost of power by over 40 percent by end of this calendar year; and plans to fast track the Standard Gauge Railway project and build 10,000km of road infrastructure through an innovative financing model,” President Kenyatta said. Kenya’s Textile industry has...

DURING the last week of October, an eleventh hour East African Community and European Union comprehensive trade deal under Economic Partnership Agreement was initiated. This development was reached following intense lobbying and pressure from Kenya, the EAC most advanced economy and the only non least developed country in the bloc. Nairobi was desperate to have the EPA agreement initiated because its horticultural producers were facing a new tax regime in Brussels for the EAC's failure to kickstart the free trade pact which by 2025 will see heavily subsidized European producers export into the EAC or rather Kenya and by implication the EAC bloc, tax free. In a statement, the EU said that under the proposed EPA trade pact, exemptions are also included and cover mostly agricultural products which remain sheltered from EU competition and to allow time for domestic preparations. The EAC will liberalise progressively to 82.6 per cent of its imports by 2025 after the pact enters into force. Responding to critics of the deal who fear that the EPA deal will simply unlock about 17 per cent of the bloc's tariffs barriers because under the EAC Customs Union Protocol, already about 65.4 per cent of imports from across the world are already liberalised. Tanzania which is a big player in the EAC Customs Union, has indeed benefited from the bloc's integration although critics argue that while exporting raw materials to feed Kenya industrial base, imports of manufactured goods have also increased tenfold. A brief background check of EAC's...

Tanzania’s senior official at the permanent mission in Geneva, Switzerland, Prisca Mutani, has said that the Trade Facilitation Agreement (TFA) as a legally binding pact is not balanced in a manner consistent with the development agenda. In her presentation paper at the Third Regional Meeting of the PACT EAC Project in Bujumbura, Burundi, Mutani said that the TFA has no binding commitment on the question of technical assistance and capacity building as it lacks clarity on source of funds, and terms of accessing the same. “Trade Facilitation Agreement Facility was launched by the WTO but it only addresses assistance on soft projects such as workshops, needs assessments and other related aspects,” she said. She went on to say that the system must work for all and not just for selected few and for the timely correction of any imbalance or abnormalities in the system or its rules is critical. “If the system fails to function in a fair and just manner then the most vulnerable sections of the world's population would be left behind. She added: “The other challenge that is emerging is the Plurilateralisation of the TFA due to the failure to adopt the Protocol of Amendment of which this is being opposed by some of the developing countries including the African Group and the LDCs claiming that these are isolationist in nature and undermine multilateralism”. She pointed out that the African ministers in various African Ministerial Conferences took a stand against plurilateral approaches and so far there has...