20 June 2016

East Africa: Eliminating NTBs, Boosting Trade, Improving Lives

Photo: The New Times
A cargo truck at Rusumo border. Local traders have for long complained that NTBs along the Central Corridor increase cost of operations (file photo).

The Ministry of Trade and Industry (MINICOM) and TradeMark East Africa (TMEA)-supported drive to eliminate non tariff barriers has paid off; businesses are reporting savings in terms of time and cost of transporting goods across regional borders.

One person who can testify to this is Ahmed Hamad the Managing Director, SIMERA Transport Rwanda Ltd, a clearing and transport company whose trucks ply the Central Corridor. For the last 15 years, clients have trusted him to deliver goods safe, secure and in good time from Kigali to the Dar es Salaam port and vice versa; but it was not always easy.

"It used to take us about 17 days to take cargo from Kigali to the port due to many checkpoints, weighbridges along the way and border delays. Clearing at the border took on average 8-10 hours per truck, and if you reached late you sometimes had to sleep over," Ahmed says.

Ahmed says that time wastage increased transport costs, pushing up the cost of the final product.

Regional efforts to fight the Non-Tariff Barriers (NTBs) led to the formation of National Monitoring Committees (NMCs) on NTBs in the respective member countries, but they faced major challenges on many fronts and remained largely ineffective.

Things began looking up when, in 2011, TMEA came on board with initiatives to strengthen NMCs across the region and their operational structure, in order to turn them into efficient instruments to identify and eliminate NTBs.

According to Vincent Safari, the Coordinator of Rwanda's NMC for elimination of NTBs, from 2008 the EAC Time Bound Framework has recorded more than 100 NTBs, with most being related to physical barriers such as poor infrastructure that caused inefficiencies on the borders, multiple checkpoints, roadblocks and weighbridges along the way, and congestion at the ports.

"For instance, Tanzania charged Rwandan trucks a $500 transit toll, yet Rwanda charged Tanzanian registered trucks only $152, costing Rwandan transporters an extra $348 for each return trip," Safari says. The results were disastrous for Rwanda's freight industry.

"A TMEA-funded study by the Ministry of Trade and Industry, revealed that this extra charge on Rwandan trucks by Tanzania had led to a drop in Rwanda's market share of the trucking industry from 21 to 14 per cent from 2007 to 2012," Safari notes.

Making progress

Over the past five years, and with TMEA's support, concerted efforts by the different stakeholders (traders, NMCs, line ministries etc.) have led to identification and resolution of the vast majority of NTBs in the region.

"Close to 100 NTBs have been eliminated between 2008," Safari reveals, citing a few examples.

"Today, there is no road block in Uganda for transit vehicles, while in Kenya there are a few checkpoints due to security issues such as Al-shabaab, but they aren't as many as before. Tanzania only has eight gazetted checkpoints between Dar es Salaam and Rusumo, down from about 30," he said.

"There is also improvement in infrastructure and working hours at border posts and ports increased. For instance, the Tanzania port is now operational 24 hours," he adds.

The number of weighbridges on both corridors has been reduced as well.

"Weighbridges on the Kigali- Dar es Salaam route have been cut down from eight to three," SIMERA's Ahmed notes, while in Kenya, only four out of an original seven remain.

However, transporters and TMEA say that a lot remains to be done as far as total elimination of NTBs is concerned, "while most trade barriers identified in 2007 have been removed, new ones had sprung up", explains Anataria Karimba, TMEA Ag. Country Director. "The fight against NTBs is a continuous process and we remain committed to continuing our support towards the removal of NTBs across the region. We will actually scale up our interventions aiming at reducing all barriers to trade, including NTBs, under the second phase of TMEA programme starting next year up to 2023."

Boosting efficiency, saving time

For Frank Tabaro, a Clearing and Forwarding agent with Bravo Logistics Ltd at the Gatuna border, the new changes have been marked by an improvement in the efficiency of the entire system.

"A few years back, it used to take days, sometimes as long as two weeks, to clear a truck of goods at the border.

Now, because of the improved, automated systems at the border, efficiency has been improved and the process is much shorter. It takes about 30 minutes maximum now to clear goods on the Rwandan side. In fact given the number of trucks that cross the border daily, this is leaving some of us idle most of the day," he jokes.

This streamlining of procedure has led to important time-savings both for traders and transporters.

Issa Mugarura, a truck driver and the vice-president of Rwanda Long Distance Drivers Union (ACPLRWA) narrates:

"We used to fill so many forms when crossing the borders, whether in Kenya, Uganda and Rwanda, and that used to cost us a lot of time. In addition, there were many stopovers depending on where one was heading."

"Today, we only fill one form when crossing borders in the region; and the number of stopovers has been reduced significantly, leading to time savings for us."

Crunching the numbers

This experience is borne out by hard figures.

A 2015 independent evaluation report on the project revealed that intra-regional trade is enjoying a major boost as a result of elimination of the various NTBs.

For instance, harmonization of road user charges from $500 to $150 between Rwanda and Tanzania has resulted in annual savings of about $800,000 by Rwandan transporters.

Transit time from Mombasa to Kigali has dropped from 21 days in 2010 to 5-6 days today; while it now takes 3-5 days from Dar es Salaam to Kigali, down from 17 days in 2010.

There has been a $1,700 saving on transporting a standard (40ft) container from Mombasa to Kigali, resulting in savings of over $7 million on the Mombasa-Kigali route since 2011.

Meanwhile, application time for Tanzanian electronic Certificates of Origin has seen an even sharper drop, going from 5 days initially to just one hour.

Perhaps the crowning achievement of this drive is the passing of "East African Community Elimination of Non-Tariff Barriers Act, 2015" by the East African Community Legislative Assembly. The law is intended to be binding once it has been ratified by the five member-states.

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