12 April 2009

East Africa: Corruption Hurting Business in Region

Kigali — Non Tariff Barriers (NTBs) are fueling corruption and hurting business growth in the East African Community, according to a report released recently by the Rwanda Private Sector Foundation(PSF).

The report, released by PSF Chief Executive Officer, Emmanuel Hategeka, was a result of a survey commissioned by the PSF aimed at assessing the challenges importers and exporters in the region go through.

The report, Assessment of Non Tariff Barriers along the Northern and Central Corridor, say the for instance, a truck driver has to part with a total of US$897 in bribes on a single trip from Kigali in Rwanda to the coast at Mombasa. The importer or exporter has to foot this extra bill.

As a result, Rwanda based business community is the most disadvantaged, as they have to pay thousands of dollars in bribes at the many roadblocks along the 1,700km to Mombasa port.

The report adds that NTBs like weighbridges coupled with poor infrastructure in the region are pushing transport cost to an all time high, which costs are pushed to the final consumers. The private sector in Rwanda is now insisting that the NTBs should be removed.

Breaking down how the money is spent, about $193 is paid in Uganda and $703 in Kenya on bribes at roadblocks.

At Uganda roadblocks, the police take as-little-as US cents 0.4 (Shs1,000) but they are quit numerous that one parts with thousands of shillings while in Kenya the drivers parts with US 0.6 cents KSh50 at every road block.

The costs at weighbridges are exorbitant. "At weighbridge you either pay it (bribe) or get arrested and prosecuted," says the report. Once you give the money , they even don't bother to know what you are carrying in the container but if you hastate to give them kitu kidogo (bribe), then policemen start creating some issues to fault the truck and truck drivers, according to the report.

The report says over 57% of the time along the northern corridor is spent stopping.

According to shipping companies interviewed in the report, daily parking fees for the trucks and waiting for the documents costs money losing approximately $400 per day.

While so many NTBs along the transport corridors are key drivers of high transport costs, the report also underlines procedural barriers including acquisition of a series of documents.

At Magerwa, a bonded ware house in Kigali, traders have to process seven documents before the beginning of the journey. This takes time of between 2 to 3 days.

It is not the first time the issue of non tariff barriers is raised. The EAC counties had agreed on a time-bound programme on elimination of the NTBs as a key component of the implementation of the Customs Union.

The private sector has been pushing for barriers to be eliminated and during the East African Investment Conference in Kigali last year, the Heads of State Summit was reminded about the need to eliminate the barriers.

President Mwai Kibaki heard the business community cries and ordered the number of weighbridges to be reduced from eight to two.

He wanted one at Mariakani and the other at Malaba, but this has not been fully implemented, according to the private sector. He also instructed his technical staff to reduce the roadblocks from 47 to 15.

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