22 October 2012

Rwanda Squeezes Tz to Remove Barriers to Trade

Photo: Luba Freeport
Dock workers handle containers at an African port.

Landlocked Rwanda has secured some concessions from fellow East African Community (EAC) partner state Tanzania, to remove non-tariff barriers that continue to inhibit movement of goods between Rwanda and the Indian Ocean port of Dar-es-Salaam.

A bilateral trade deal sealed by the two countries last week in Kigali, comes in handy to ease growing frustration among Rwandan importers over delays caused by numerous trade barriers--either through the Kenyan port of Mombasa or Dar-es-Salaam.

At the core of the new rules of engagement is the desire to significantly reduce the time goods spend on the way between Dar and Kigali--the biggest cause of frustration for Rwandan importers.

Tanzania, itself aiming to popularize the use of Dar-es-Salaam as a port of choice and not a mere alternative to the relatively popular Mombasa, has had to give concessions on a number of issues raised by Rwandans during two days of talks.

In what has been seen as a major breakthrough for the Rwandan business community, Tanzania has promised to immediately modernize and expand cargo handling facilities at Dar port to ensure faster and efficient clearing of goods. Tanzania has also said plans are underway to build another port at Bagamoyo to ease congestion at Dar. Congestion and delays in Dar has been a major cause of unhappiness for traders in landlocked countries such as Rwanda and Uganda who have often routed their goods via Mombasa, even when the Kenyan port has hard its own share of shortcomings.

Some of the major innovations expected at a modernized Dar port include 24-hour operations that will allow importers to clear goods as soon as ships dock to ensure timely deliverance to the market and minimize demurrage.

When goods leave the port and arrive at Rusumo--the main border post between the two countries, they are also expect to be cleared for onward movement within reasonable time. In order to achieve this, Rwanda and Tanzania will immediately embark of improving infrastructure at Rusumo. Such infrastructure will include a one-stop border post with facilities that can enable Rwanda Revenue Authority and Tanzania Revenue Authority to interface and share information in a way that can reduce on the paperwork traders have to deal with. Rusumo will also be open 24-hours. In addition, Tanzania will also work to ensure that other border posts such as Isaka and Nyakahura "are included in the program of 24-hour operation for the smooth flow of goods from Isaka to Rusumo."

Japan recently extended $30 million support aimed at developing infrastructure for a one-stop border post at Rusomo to ease trade facilitation. If completed by March, 2014, it will hopefully reduce on the almost eight stop points traders currently have to contend with.

Tanzania, according to the new agreement, will also do a study on the optimal number of weighbridges, roadblocks, checkpoints. Traders have often complained that tracks carrying goods are subjected to unnecessary checks at such facilities which they say are too many--another cause of delays. It is expected the unnecessary weighbridges, roadblocks and checkpoints will be removed soon after the outcome of this study is revealed in December.

According to the East African Community Business Climate Index, 2008, businesses in the region lose about 172,236 hours per year to numerous checkpoints and weighbridges. At the same time, businesses also pay about $9.6 million in bribes per year to corrupt officers who man these police roadblocks and weighbridges.

Many traders complain of demands for varying and excessive documents from one country to another, insufficient use of information communication technologies as well as lack of coordination between customs bodies and other government agencies, the report says.

This bilateral trade agreement between Rwanda and Tanzania tries to harmonize trade policies among the two neighbors--the lack of which has been cited as major hindrance to intra-region trade.

In the third edition of Rwanda Economic Update subtitled titled: Leveraging Regional Integration, the World Bank says that there is a persistent general lack of policy harmony in the east African region that "holds back infrastructure in promoting intraregional trade."

"Many border crossings have antiquated infrastructure, inadequate coordination between the [concerned] two countries and congestion," the report adds.

Other major policy changes expected to ease the flow of goods across borders include simplifying certificates of origin for goods originating from within the EAC. "Tanzania will issue simplified certificates of origin for goods originating in the EAC partner states free of charge," says the agreement signed by Rwanda's minister of trade and industry, Francois Kanimba and Tanzania's deputy minister of industry and trade, Gregory Teu.

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