KAMPALA, Uganda – Transport costs in East Africa are around 60% higher than those in the United States or Europe and this is complicated by the many underdeveloped supply chains which keeps rates up.

The British government’s Department for International Development (DfID) has come up with a $16 million fund to pay for ideas that would provide practical savings for East African business people and traders. More money is being sourced.

Consultancies and other firms are being invited to offer solutions that will help business people reduce their regional transport costs

Over seeing Logistics Innovation for Trade (LIFT), is TradeMark Africa (TMA) who are already at the centre of streamlining cross-border trade across the region

“Its aim is to encourage the private sector to invest in East Africa’s logistics and transportation industry, testing out fresh innovations that will help bring down the significant barriers to trade that slow the region’s economic development,” Frank Matsaert, the TMA chief executive officer said recently.

He said, “The idea is that LIFT will shoulder part of the perceived risk of investing in East Africa and reduce the cost of entry for companies eyeing the region.”

Deadline for applicants is tomorrow, but by last week more than 30 private firms had applied for grants in the first round.

Matsaert said, “One example of the type of innovation TMA hopes to trigger through the grants is the development of electronic platforms allowing small businesses to jointly buy space on a truck rather than individually bearing the whole cost of one vehicle.”

TMA is a non-profit consultancy involved with streamlining regional trade.

The fund follows a model trailblazed in East Africa by M-Pesa, a mobile money wallet that allows users to store and transfer money using their mobile phones.

Telecommunications provider Safaricom initially received a grant to absorb the risk of developing the product, which 80% of Kenyans now use.

According to Nathan Associates’ Garcia Parra, Several applications seek to address information asymmetries, for example through the creation of online exchange platforms, with a view to bringing the price of transport and logistics services down. Fund managers also expect to receive a number of ICT-based proposals to improve logistics efficiency. According to sources, the fund has generated an Encouraging response in terms of proposals on East Africa’s so-called central trade corridor, which serves Burundi, the Democratic Republic of the Congo, Rwanda, Uganda and South Sudan, with the emphasis here on reviving solutions.

Source: East African 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.