Mark Kapchanga
16 August 2008
Nairobi — Four years after the signing of the East African Community Customs Union protocol, inter-regional trade volumes among EAC member states are yet to pick up.
A survey commissioned by the East African Business Council found that the majority of businesses in the region think non-tariff barriers as the main impediment to the realisation of the goals of the EAC Customs Union.
Poor road network, high taxes and duties, extortion, delays by border officials and restrictions on importation and exportation of goods were felt to be major drawbacks in more than 75 per cent of border towns in the region.
A truck driver transporting goods from Mombasa to Kigali, for example, encounters more than 20 barriers set up by police, inevitably delaying delivery of the goods in transit.
Despite this alarming situation, there are no formal monitoring mechanisms for truck drivers, cross-border traders and clearing agents to report their experiences with non-tariff trade barriers.
It is not surprising therefore that businesses in the EAC region opt to import most of their requirements from the rest of the world.
Tanzania's imports from the non-EAC world account for 75 per cent of its total imports, while the figure for Burundi is 43 per cent. Imports from EAC countries by Kenyan and Tanzanian businesses account for only six and five per cent of their total imports respectively.
Europe is the chief source of imports to the EAC countries, taking between seven and 14 per cent of the total.
This year's EABC survey follows the "Climate Index for East Africa" done in 2003, a year before the Customs Union protocol was signed.
The study listed high border-crossing charges, lengthy bureaucratic checks and verification inspections by Customs authorities as the main problems hindering the smooth flow of trade within EAC partner states.
Tragically, five years after EABC recommendations on their elimination, the business community is still facing the same problems.
In the survey, EABC calls for speedy implementation of the monitoring mechanism to fast-track elimination of NTBs in the EAC.
NTB Monitoring Mechanism was developed jointly by EABC and EAC and was adopted by the Council of Ministers in August 2006 with the objective of facilitating the process of identifying, reporting and monitoring the elimination of current and future NTBs in the EAC.
According to EAC Director of Customs Kenneth Bagamugunda, "NTBs increase the cost of doing business, thus rendering the region uncompetitive. This defeats EAC's integration objective of developing a competitive private sector both in the region and globally."
He said that one of the serious impediments to doing business in the EAC is the sorry state of infrastructure.
The costs associated with congestion and delays at ports, telecommunication, poor road and railway networks and prohibitive air travel costs, "all undermine the relative competitive advantage of doing business in the region, rendering our products unable to compete with cheap and illegal imports and also uncompetitive in export markets."
Kenya's East African Community Ministry Permanent Secretary David Nalo says there is an urgent need for the immediate removal of NTBs if cross-border trade is to realise efficiency. Mr Nalo urged both private and public sectors to actively take part in the process of implementation of the Customs Union.
The survey says the EABC needs to collaborate with EAC Secretariat to ensure enhanced publicity for the EAC NTB monitoring mechanism.
"Capacity building needs assessment of the units charged with the responsibility for implementing the mechanism should also be considered, as the basis for a concerted capacity building intervention in support of EAC efforts for elimination of NTBs," it says.
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