Transporters using the Northern Corridor have been bearing some of the highest costs in the world, reflecting how shortage of arteries is impeding the competitiveness of the East African region to trade. According to a survey carried out by the Shippers Council of East Africa (SCEA) , transport costs in the region are estimated at $1.8 per km per container against international best practices of $1 per km per container. “The most expensive route to transport cargo was Kampala-Mombasa at $2.5 per tonne followed by Mombasa-Kampala at $2.17, Dar es Salaam-Kampala $1.17 and Bujumbura-Dar es Salaam at $1.02 per tonne,” the SCEA Logistics Performance Survey 2021 report says. “The top three least expensive international routes were Dar es Salaam-Bujumbura at $0.02 per tonne, followed by Dar es Salaam-Kigali at $ 0.17 and Nairobi-Dodoma at $0.1 per tonne.” The Northern Corridor road network covers 12,707km (1,323.6km in Kenya; 2,072km in Uganda; 1,039.4 km in Rwanda; 567km in Burundi; 4,162 km in DRC and 3,543km in South Sudan). The port of Mombasa is the key entry and exit point for cargo belonging to a vast hinterland that includes Burundi, DR Congo, Kenya, Rwanda, South Sudan and Uganda. The port also serves Tanzania, Somalia and Ethiopia. High logistics costs The report summarises average transport cost per metric tonne, assuming a payload of 24 metric tonnes per 40-foot container. Speaking at a webinar by the East African Business Council and TradeMark Africa, National Logistics Platform in Uganda chair Merian Sebunya appealed to governments to...

The main focus for the EAC SMC is to ensure that standards are developed for the most traded commodities in the region. Secondly, for products that are thought to gain a market outside the EAC the SMC ensures that these standards too are developed accordingly. The East African Standards Management Committee is responsible for the development of harmonised standards in all the sectors i.e. products and services. The main role of the SMC is to provide support to technical committees in the EAC to have agreement on standards intended for harmonization so that products can easily cross borders within the seven (7) East African Community (EAC) partner states. There are currently 64 Technical Committees in the EAC which are spread across the sectors of engineering, chemical & consumer products, food & agriculture and Management & financial services. The main focus for the EAC SMC is to ensure that standards are developed for the most traded commodities in the region. Secondly, for products that are thought to gain a market outside the EAC the SMC ensures that these standards too are developed accordingly. The good thing with the EAC SMC is that the need for standards is as a result of studies which have been undertaken by the private sector organisations such as the East African Business Council, as well as development partners such as TradeMark Africa (TMA) on cross border trade of products. These studies are instrumental in identifying standards that need to be developed. It is therefore not by...

Competition between old and upcoming ports on the eastern African coast could signal better alternatives for importers who have struggled with inefficiency. A new report by logistics consultancy firm GBS Africa says that while veterans at the job such as the Port of Mombasa in Kenya and Dar es Salaam in Tanzania could face rough challenges from newcomers, it could be good news for importers as they may be spoiled for choices. The report is based on a survey on investments in ports in the region. It found that the planned new deep harbour facility at Bagamoyo in Tanzania and Lamu in Kenya offer importers and exporters alternatives. Bagamoyo is seen as the biggest game changer in Tanzania and the immediate challenge to Mombasa. In fact, new investments in Tanzania and Kenya could inadvertently cause some form of cannibalism, as players are likely to rush to where efficiency is. In Mombasa, the challenge of efficiency has been worsened by traffic snarl-ups on key corridors exiting goods from the port. The report notes that the port of Dar es Salaam offers faster and more cost-effective trade and transport solutions than Mombasa, citing that the port of Dar es Salaam is benefitting from ongoing expansion and investments. The Dar es Salaam port is designed to handle more than 10 million tonnes of cargo annually, where four million tonnes are dry general cargo, six million tonnes of liquid bulk and one million tonnes in the container terminal section. The competition among ports has already...

Kenya has listed 14 merchandise and service sectors for trade under the African Continental Free Trade (AfCFTA), as it becomes among the first six to pilot the continental pact. This comes even as countries continue to push to clear pending issues on preferential Rules of Origin on sensitive goods which account for 7% of the tariff lines. The stalemate is on textile and apparel, sugar and sugar products, goods produced in Special Economic Zones (SEZs), edible oils and motor vehicles. Nevertheless, member states have agreed on 88.7% tariff lines of about 6,000 products, open for trade on preferential terms. Industrialization, Trade and Enterprise Development CS Betty Maina yesterday said Kenya’s prioritised sectors in merchandise trade include agriculture, livestock and fisheries, manufacturing, handicrafts, mining, oil and gas. Priority export sectors under services trade are business including professional services, tourism, education, health, financial services, ICT, cultural and sports services; and transport and logistics. Kenya and Ghana were the first countries to ratify the AfCFTA and to deposit instruments of ratification with the AU Commission, after the agreement was adopted by the AU Extra-Ordinary Summit on March 21, 2018 in Kigali, Rwanda. Despite the launch of the commencement of trade in January 2021, commercially meaningful trade was yet to commence. To date, 54 African Union (AU) member states have signed the AfCFTA agreement with 49 having ratified it, making them eligible to trade. However, only six countries– Ghana, Cameroon, Egypt, Rwanda, Tanzania and Kenya are leading the pact in the pilot phase, with volumes expected...

Traders risk up to Sh500,000 in fine or a year in jail if they fail to register online for clearance of all imports and exports as the State moves to plug loopholes manipulated to ship in or export products. This follows the creation of the National Electronic Single Window System, which is now the only entry point to register and clear all inbound and outbound cargo. The online clearance system is linked to the Kenya Revenue Authority and the Kenya Ports Authority, giving the State more tools to tame tax evasion. “The system shall serve as a single entry point and platform for any person involved in trade and transport to lodge documents electronically, including import or export documents for processing and approval,” the Act reads in part. The law took effect on July 11 and revokes an Executive Order of 2010 that the government relied on to ensure that imports or exports are cleared electronically and ensure compliance with all taxes and duties. State agencies, including the Energy and Petroleum Regulatory Authority, Kenya Plant Health Inspectorate Service and Agriculture and Food Authority have also been linked to the system. An estimated 15,000 traders registered with the systems last year, highlighting why the government pushed for changes to the law to make listing compulsory. The platform will ease clearance hitches by offering a single paperless platform, a shift from the present situation in which traders have to visit every single entity. The system is key to facilitating cross-border and international...

The East African Business Council (EABC) just released its Barometer on Business & Investment in the EAC & Outlook 2022/2023, which captures the sentiment of the business stakeholders about how they see the business environment within the EAC. EABC is the apex advocacy body of private sector associations and corporates from the six East African Community (EAC) partner states Burundi, Kenya, Rwanda, South Sudan, Tanzania, Uganda, and DRC. It was established in 1997 to foster the interest of the private sector interests in the EAC integration process with the primary mission of promoting sustainable private sector-driven growth. EABC has Observer Status at the EAC level which offers an avenue for advocating the private sector interests in the EAC integration agenda with a view to promoting a conducive business environment in the region. This year’s EABC barometer shows the rate of investments, operation, and performance of businesses in the EAC bloc is recovering, and business stakeholders are optimistic about business in EAC. Economic Recovery from Covid-19 in EAC The Covid-19 pandemic has had a profound effect on businesses in the East African Community and globally. Some containment measures employed by EAC partner states to curb the pandemic such as curfews and closure of certain businesses negatively affected businesses in various ways. On the other hand, other businesses thrived by taking advantage of the new opportunities provided by the pandemic for instance manufacture of protective equipment, and medical care among others. The economic effect of the pandemic has been a subdued GDP...

Aid for trade is a crucial part of the integrated policy approach needed for trade and trade policies to advance sustainable development and support environmental objectives in least developed countries. At the Eighth Global Review of Aid for Trade on 27–29 July 2022, governments and stakeholders shared views on how best to harness aid for trade to support a just transition to sustainable trade that addresses the needs of developing and least developed countries. Extreme weather events and changing climate conditions are causing hundreds of millions in economic damage and severe suffering in least developed countries (LDCs). Eritrea, Madagascar, Mauritania, Chad, the Democratic Republic of Congo, Sudan, Mali, Ethiopia, and Congo face climate adaptation costs higher than their national spending on healthcare, with these adaptation costs ranging from around 5–22% of gross domestic product. The ocean states of Kiribati, the Solomon Islands, and Tuvalu and countries like Bangladesh, Senegal, Tanzania, and Uganda are flooded with plastic pollution with tremendous economic and health costs. From Laos to Madagascar and Guinea, rural populations, which account for two thirds of people living in LDCs, are experiencing the loss of biodiversity and ecosystems on which they directly depend for their subsistence. Faced with the huge social and economic toll of these planetary environmental crises, despite bearing the least historical responsibility for them, the world’s poorest nations have repeatedly highlighted the need for international support measures, including through Aid for Trade to address their trade-related impacts. Fostering aid for trade for sustainable development As governments and stakeholders...

Trade initiatives must keep up with the evolving needs of developing and least developed countries (LDCs) in order to adapt to climate change as part of a global economic strategy, participants heard at the Aid for Trade Global Review on 28 July. Open trade and lowering barriers to environmental goods and services must play a critical role in providing affordable access to advanced technologies needed to transition to a low-carbon economy, speakers said. At a plenary session on the second day of the Aid for Trade event, speakers focused on how this initiative can help develop critical trade infrastructure while supporting resilient, climate friendly and inclusive trade outcomes. The session benefited from the expertise and practical insights of experts and financing partners engaged in green transition activities. In his opening remarks, WTO Deputy Director-General Xiangchen Zhang told participants that climate change is one of the most pressing challenges of our time. The World Bank estimates that natural disasters already cost low- and middle-income countries USD 390 billion per year regarding damage related to water, transport and power infrastructure. “In that context, adapting to climate change by reducing climate-related risks and vulnerability is a key economic strategy. International trade can contribute to climate change adaptation efforts by enhancing economic resilience to extreme weather events through diversified supply chains, timely provision of essential goods and services, improved food security, and greater access to climate-related adaptation technologies,” he said. DDG Zhang stressed that the transition to a low-carbon economy entails a substantive transformation...

Digitalization brings new opportunities in trade and creates the potential to underpin resilience in times of crisis The digital transformation of customs and borders in Africa could improve efficiencies in processes and yield trade gains on the continent of US$20 billion a year Single Window can cross-check credentials for consistency and traceability, reducing errors and fraud The digital transformation of customs and borders in Africa could improve efficiencies in processes and yield trade gains on the continent of US$20 billion a year. Digitalization brings new opportunities in trade and creates the potential to underpin resilience in times of crisis. The digital transformation of customs and borders in Africa could improve efficiencies in processes and yield trade gains on the continent of US$20 billion a year. With digital trade in place, pre-existing bottlenecks in infrastructure can be tackled, efficiencies can be leveraged, and Innovative solutions can be harnessed. However, countries in Africa vary greatly in their readiness for digital trade. In African countries where economic resilience must be fostered, jobs must be created and entrepreneurship must be facilitated, digital trade must be in full swing. How digital automation is easing the flow of trade Thanks to technological advances, importing and exporting goods and services in Nigeria has become easier thanks to the rise of online international trade administration portals. These online portals automate the experience for many stakeholders including customs officials, businesses importing finished goods and raw materials for manufacturing, and those exporting their goods across the globe. Blockchain technology, Artificial Intelligence (AI),...

Summary The EABC Business Barometer is an index that captures the sentiment of the business stakeholders about how they see the business environment within the EAC. Businesses in Burundi, Kenya and Uganda reported reduced cost of doing business during the pandemic. Business captains in the region are optimistic that business in the East African Community bloc will increase by 11 per cent in 2022 and 2023. The East Africa Business Community Barometer on Business and Investment links the slight optimism to perception of business owners on the effectiveness of measures introduced by governments in response to the Covid-19 pandemic. Several states imposed key discretionary actions and policies in 2020 and 2021 to limit the human and economic impact of the pandemic. In Kenya, for instance, a package of tax measures was adopted, including full income tax relief for persons earning below Sh24,000  per month and reduction of the top pay-as you earn rate from 30 to 25 per cent, There was also a reduction of the base corporate income tax rate from 30 to 25 per cent, reduction of the turnover tax rate on small businesses from three to one per cent, and a reduction of the standard VAT rate from 16 to 14 per cent. These conditions, according to business owners, plus other loan flexibility policies, contributed a large extent of the growth. The EABC Business Barometer is an index that captures the sentiment of the business stakeholders about how they see the business environment within the EAC. It shows the...