Mark Kapchanga
9 August 2008
Nairobi — Over Ksh2 billion ($31.6 million) worth of unrecorded transactions take place in East Africa's border towns, despite a huge number of Custom officials deployed at the border posts, a new study by the East African Business Council (EABC) says.
This "substantial" trade is blamed on export and import restrictions on foodstuff, tariffs on non-East African Community originating products and the inability of cross-border traders to meet the requirements stipulated in the Customs declaration form, which is considered complicated.
Cereals, sugar, beer, textiles, machinery and mechanical equipment and petroleum products top the list of goods illegally transacted across the borders.
The situation is worsened by the low number of standards verification personnel engaged in checking the quality of goods being traded across the EAC member countries. Over 50 per cent of the border posts have understaffed standards departments.
Bujumbura in Burundi and Kanyaru in Rwanda lack sanitary and phytosanitary (SPS) officials, posing a high risk of animal and plant disease transmissions.
"Burundi has posted an exceedingly high number of officials in its Bujumbura office compared with its other border offices.
Given the significance of standards in promotion of intra-regional trade, there is a need for ensuring that all border posts are adequately staffed with Bureau of Standards officials," the study says.
Tanzania and Kenya's border posts are well staffed with health officials, but Rwanda and Burundi have no health officials in any of their border posts.
But even border posts with SPS officials tend to be understaffed, with the majority of them having only one official who either covers plant or animal SPS issues, but not both. Mutukula and Kigoma in Tanzania, Gatuna in Rwanda and Kanyaru in Burundi have only one official tackling either animal or plant SPS.
Things are no better with the infrastructural and banking services at the border posts, with some inspection bays serving as parking bays. Over 58 per cent of the parking bays at border posts have potholes and inadequate space.
Parking bays in Malaba (Kenya-Uganda) have numerous potholes with big stones being used to fill them on the Kenyan side.
Out of 12 border posts surveyed, only five had banking services.
However, the banks did not open on weekends. In addition, only two posts have petrol filling stations that are operational.
Delays at the border and along transit routes of traders and trucks are common. On average, Customs take more than 100 minutes to clear trucks across the borders and a quarter of an hour to clear traders and clearing agents.
SPS authorities, standards bureaus and police take 96 minutes, 109 minutes and 117 minutes to clear truck drivers, traders and clearing agents, respectively. Bujumbura, Kigoma, Malaba (Kenya-Uganda) and Namanga (Kenya-Tanzania) are credited for taking a short time in their clearance of traders while Mutukula (Tanzania-Bujumbura) and Namanga take the least time in clearing truck drivers.
Truck drivers and traders encounter more than 20 barriers mounted by police on the transit routes. There is also no formal non-tariff barrier monitoring mechanism in place where traders can record their problems.
Traders at the border points claim that the complexity of clearance forms is a major cause of delays in clearing goods.
Traders also have to pay some charges to clearing agents.
The amount payable depends on the volume and variety of the goods being traded, with the lowest fee being Ksh200 ($3.10) in Malaba in Uganda. The highest charging border point was in Mutukula in Tanzania, where a trader had to part with Ksh8,375 ($126.90).
The study says excess capacity is the main hindrance to competitiveness of businesses in the region. Rwanda and Burundi are said to be severely affected by excess capacity, with 40 and 50 per cent respectively of their companies operating at between 10 per cent and 30 per cent capacity.
Kenyan, Ugandan and Tanzanian businesses operate at between 81 per cent and 100 per cent capacity.
To deal with these problems, EABC recommends that an awareness and publicity campaign about EAC Customs Union among the business community members be launched. The content of the publicity also needs to be improved to "ensure the business community has access to information."
According to the survey, the majority of the business community members, especially in Burundi and Rwanda, are ignorant of the benefits that accrue from a Customs Union. Only 50 and 40 per cent respectively of the two countries' populations understand what such a union is all about.
Secondly, domestic production chains should be integrated into the EAC market. This, the survey says, will facilitate exploitation of the opportunities for enhanced intra-EAC trade building under the EAC Customs Union.
The possible strategies to be explored include initiation of EABC and EAC periodic round-tables to monitor exploitation of the EAC market potential, mapping of trade and regulatory requirements at national and regional levels for different products, identification of products with intra-EAC trade potential and development of a network of buyers and suppliers.
The region should focus on the development of its infrastructure; devise measures on capacity utilisation for companies experiencing excess capacity and expedite harmonisation of the EAC, SADC and Comesa trade regimes.
The survey report comes at a time when the EAC member states are preparing for Common Market Protocol negotiations starting next week in Nairobi. Despite the border challenges, the report says the implementation of the EAC Customs Union is on course "in accordance with the roadmap agreed among the EAC member states."
Kenya's Minister for the East African Community, Amason Jeffer Kingi, said the survey provides results that need to be validated and appropriate actions recommended.
"The business community and citizens want to see results if they are to support the integration agenda. Effects emanating from the integration process need to be demonstrated."
Be the first to Write a Comment!
Copyright © 2008 The East African. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
