Kampala — The strike truckers staged at Malaba border protesting a breakdown of the parking yard staged, just two days to the end of a meeting apparently convened to ponder ways of deepening trade in eastern and southern African countries, highlights what in fact impedes trade in the region-- poor infrastructure.

The state of the customs clearing yard, according to the truckers, had been neglected by the Uganda Revenue Authority to deteriorate, with the grounds developing craters tripping vehicles daily.

CRUCIAL: President Museveni addresses delegates at the recently concluded tripartite summit. photo by geoffrey sseruyange

While truckers were struggling to get attention, regional leaders from the Common Market for Eastern and Southern Africa (Comesa), the East African Community (EAC) and the South African Development Community (SADC) were putting pen to paper on creating a unified free trade zone.

The merger intended to eliminate complications from the existing structure of overlapping and conflicting blocs is expected to boost inter-African trade, an underexploited source of growth for Africa, whose share of global trade is only 2 per cent.

Uganda spent Shs3 billion to host the summit. However, a few days after the regional meeting ended in Kampala, the feeling among the business community is that the meeting's priorities were misdirected.

Business leaders feel that the meeting should have dealt with problem of infrastructure and transport, the major problems affecting trade in the region.

Mr Gideon Badagawa, the executive director of Uganda Manufacturers Association, in an interview, cast the efforts of political leaders in Uganda in championing the integration of regional blocs as misdirected efforts and representing a flawed diagnosis of what ails Uganda's export trade.

"Our transport infrastructure is horrendous to the extent that farmers say in Kamwenge cant access the regional market in Mbarara town," he said.

"Now, if you're unable to move goods within the country, how are you going to get them exported even if you were all the markets in the world?"

Over the last twenty years, a period over which private sector business has expanded rapidly, Uganda's economic infrastructure--roads, railways, waterways, ports has terribly deteriorated.

Much of the nation's road network is currently impassably potholed, slowing transport of merchandise around and out of the country. Water transport is almost non-existent with one of the nation's only two ships, MV Kabalega having sunk in 2006 while the other MV Kaawa is grounded, in disrepair.

To illustrate the depth of woes besetting Uganda's infrastructure, Mr Badagawa said, before the country privatised the rail service, it was carrying 75 per cent of Uganda's inbound cargo.

In two years since the privatisation, it has plunged to 25 per cent even as the joint concession was supposed to revamp the rail and improve its efficiency. "How could such a pathetic thing happen anywhere?" he asked.

"The issues of infrastructure, energy, governance are fundamentals that must be addressed to get the industry sector in Africa more competitive," Mr Badagawa said.

Analysts also believe the much-heralded giant African trading bloc may be years in the making. The EAC has a functioning customs union and Comesa plans to launch one by December. The 15-member SADC plans a union in 2010 and 12 members launched a free trade zone in August.

However, analysts believe that the proposed merger will hit snags along the way over security, protectionism, and differing integration levels within the region that summit organisers say has a combined gross domestic product of more than $620 billion.

There are recent signs that more market access opportunities would not automatically boost Uganda's exports, without the government first tackling the critical elements of infrastructure and domestic productive capacity.

President Museveni was one of the most zealous champions of the African Growth and Opportunity Act (Agoa), a law first passed by the US congress in 2000 to give sub-Saharan African countries quota and tariff free access to the country's market.

In 2002, the government began positioning itself to take advantage of the opportunities Agoa presented. The government set up a whole office, complete with bureaucrats to coordinate and facilitate Agoa investments, and Mr Museveni personally pleaded taxpayer patience as vast amounts of public resources were splashed on to Tristar Apparels.

However, Tri Star Apparels, the factory that had been set up with heavy government subsidies, collapsed at the end of 2006, blowing a Shs20 billion hole into the treasury. It is estimated that in 2007, Uganda earned $40,000 in exports to the United States.

In January 2005, the East African Customs Union came into effect, bringing Ugandan manufacturers an additional 70 million people. Still, although statistics aren't forthcoming, most manufactures say Uganda's share of intra East African trade has not risen in any substantial way largely on account of the same constraints that hamstrung our ability to parlay the Agoa market opportunity.

While market access is, doubtless, a vital stimulator of export trade, there seems to be a broad consensus among economic analysts that it is a somewhat secondary matter.

According to Mr Badagawa Uganda would not fare any better in new regional markets if it doesn't first build its internal productive capacity and sort out its infrastructure nightmare.

Ms Florence Katta, the executive director of Uganda Export Promotions Board thinks integration efforts being pushed by regional leaders are remarkable in themselves but that the same leaders ought to be aware of the internal hurdles that would still depress our exporting capacity even if we offered larger markets.

"The issue of internal capacity is sublimely crucial," she said. "In the past Uganda's has been disappointing when it comes to entering new markets and staying there."

She bemoaned a lack of what she called export-centric infrastructure efficient roads and an internal rail system interconnecting production centres with processing transportation hubs, efficient customs points, and cheap fast routes to the sea.

However, some observers believe that the move toward a regional free trade zone in an area that summit organisers said encompasses some 530 million people was long overdue. "This is clearly a big stepping bloc to a United States of Africa. A fragmented Africa is a useless Africa," said Patrick Bitature, chairman of the Uganda Investment Authority.

The hope is that bigger markets and economies of scale will boost production and demand from Egypt to South Africa. But a free trade zone would initially benefit developed industries such as those in Kenya, Egypt and South Africa most, analysts believe.

"The bigger the market, the easier it is for businesses to grow and make a profit," President Yoweri Museveni said while opening the summit on October 22. "They (businesses) sell more and the cost of production per unit goes down because you are selling more pieces."

"In Tanzania, large companies, which are only 10 per cent of industries, will benefit from this. The other 90 percent are not efficient, and it will have a negative effect," said Mr Hussein Kamote, the director of policy and advocacy for the Confederation of Tanzania Industries

Africa has seen impressive growth rates since the mid-1990s turning it into what investors say is the last frontier market.

Although the global crisis will take the edge off high growth for now, the continent is relatively sheltered, analysts say. The three blocs said that a timetable for integration would be determined in twelve months.

But increased competition could force medium-scale businesses to invest in better technologies and improve efficiency, Mr Kamote said.

The initial impact from the merger could be less than expected since many nations already belong to trade blocs that have mismatched levels of industrialisation, said Mr Jones Akampumuza, a lecturer at Makerere University.

"That is not only a fear, but a reality when you're going into these kinds of arrangements. The important point is that while this is a recognised fact, it is already happening."