- While member countries have made huge progress in increasing intra-EAC trade, which has grown to $10.17 billion as of last year, numerous tariff and Non-Tariff Barriers (NTBs) still exist.
- The Northern Corridor Transit and Transport Coordination Authority (NCTTCA) have led the region in ironing out NTBs, while legislators put policies in place to address tariff issues.
- NCTTCA authority facilitates and promotes trade and transport to reduce regional business costs.
The East African Community has a long history of cooperation stretching back to 1900 when a Single Customs Collection point was established at Mombasa. Still, Non-Tariff Barriers remain a challenge to trade. The first instance of regional integration dates back to 1917 between Uganda and Kenya.
Tanganyika joined later in 1919. After independence, the East African Community was established in 1967, which due to several factors, collapsed in 1977. Notwithstanding the collapse, the East African Community recorded numerous successes, including policy, institutional and operational programmes.
Acknowledging the centrality of regional integration to development, the Heads of State of Kenya, Uganda and Tanzania met in 1999. They signed a Cooperation Agreement culminating in a fully-fledged East African Community in 2000. The scope of the East African Community Treaty includes economic, social, cultural and political spheres.
“The integration process is progressive starting with a Customs Union as the entry point followed by Common Market, Monetary Union and Political Federation,” the EAC secretariat notes.
Challenges in trade
While member countries have made huge progress in increasing intra-EAC trade, which has grown to $10.17 billion as of last year, numerous tariff and Non-Tariff Barriers (NTBs) still exist. The Northern Corridor Transit and Transport Coordination Authority (NCTTCA) have led the region in ironing out NTBs, with legislators putting policies in place to address tariff issues. NCTTA facilitates and promotes trade and transport to reduce regional business costs.
“In the recent past, the Northern Corridor Secretariat undertook several trade and logistics surveys in addition to several stakeholders engagement during which several challenges to smooth movement of goods were identified,” NCTTCA Executive Secretary Omae Nyarandi said.
He spoke during a meeting of Commissioners of Customs in Nairobi last week. The commissioners came together to implement measures to address challenges affecting trade in the two main trade corridors of the region.
Two major corridors serve the EAC region. The main one is the 1,700-kilometre-long Northern Corridor between Kenya, Uganda, Rwanda, Burundi and Eastern D.R. Congo, with an entry and exit point at the Port of Mombasa. The 1,300-kilometre-long Central Corridor serves Tanzania, Rwanda, Burundi, Uganda and Eastern D.R. Congo, with an exit and entry point at the port of Dar-es-Salaam.
The two corridors facilitate export and import activities within the EAC region, combining rail, road and lake transportation networks. Uganda accounts for the lion’s share ( 83 per cent) of transit cargo through the port of Mombasa. A significant percentage of volumes come through Dar es Salaam. South Sudan takes up 9.9 per cent of transit volumes through Mombasa, while Rwanda accounts for 2.4 per cent.
Each country has its NTBs, as identified by trade experts. Experts blame NTBs for slowing down the ambition of increasing intra-EAC trade, which currently stands at 15 per cent. This is compared to common markets such as the EU, which stands at 70 per cent. EAC’s total trade with the rest of the world stood at $62 billion in 2022.
The target is to increase intra-regional trade in East Africa to at least 40 per cent over the next five years, according to the EAC secretariat, led by secretary general Peter Mathuki. EAC for long banked on the Single Customs Territory (SCT) platform to support integration.
However, using different customs regimes and customs procedure codes under SCT has had hiccups, mainly in exchanging cargo data among Customs Business systems. To address this, the Northern Corridor Transit and Transport Coordination Authority has called for the fast-tracking and harmonising of customs regimes and procedure codes.
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Seamless flow of cargo
The SCT seeks seamless cargo flow along the Corridor. However, some sections of the transit routes are not geo-fenced, leading to false alerts for purported cargo diversion. This has been identified in, among other areas, the Holili-Himo region on the Tanzania side, connecting Kenya through the Taveta-Holili border.
Experts have also urged the EAC to coordinate the establishment of a monitoring centre in Burundi to enable cargo tracking along the Northern Corridor (EAC Secretariat, Burundi). Tanzania, Burundi, and DRC have not yet become parties to the Regional Electronic Cargo Tracking System (R-ECTS) used to track cargo along the corridors. Those used by Tanzania have to yet integrate with R-ECTS used by other member states.
With this, the authority is pushing to have them integrated and assist DRC in establishing a monitoring centre to enable tracking of cargo along the Northern Corridor. DRC and South Sudan have also been urged to implement the Single Customs Territory regime.
Further, the Nairobi meeting noted that management challenges of available seals for containers have led to truck drivers’ delays, for example, at the Port of Mombasa, Container Freight Stations (CFS) both in Mombasa and Nairobi, and ICDs.
“Revenue authorities need to ensure efficient management of available RECTS seals to enable trucks to embark on their journeys on time,” Nyarandi said.
Transit goods and licenses
Transit Goods Licensing (TGL) has a calendar year validity. Most of the licenses issued expire before they run for a year, with full annual fees for the license already paid.
Truck transit goods licensing lacks a harmonised approach across EAC Member States, with some countries only licensing the trailer. Truckers must have the tractor head licensed to collect cargo from ports.
Stakeholders have also challenged revenue authorities to devise alternative payment methods for paying small fees, such as alteration fees, which may arise at any time during the process of clearance of goods to minimize delays. This includes mobile payments such as M-PESA.
There is also a push to harmonise working hours, whose gaps have led to inadequate cargo processing capacity, and harmonise structures, policies, and procedures (revenue authorities, bureau of standards, port health, immigration, weighing of trucks, security organs).
The Nairobi meeting identified a major concern: power outages at One-Stop Border Posts. Truckers along the corridors also face theft of goods in transit following accidents in Kenya, which KRA penalizes as cargo dumping. To help mitigate the costs and losses, shippers and member states must sensitize cargo owners to subscribe to insurance for their goods in transit.
Resolved Non-Tariff Barriers
Despite the pending challenges, the East Africa Community partner states have resolved 23 out of 32 key Non-Tariff Barriers (NTBs), improving cargo handling and movement across the region.
The EAC Council of Ministers Chairperson and Burundi’s Minister for EAC Affairs, Youth, Sports and Culture, Ezechiel Nibigira, said the remaining NTBs are at different stages of resolution.
Last week, Nibigira spoke in Arusha, Tanzania, where he tabled the EAC budget before the East African Legislative Assembly (EALA), the budget estimates for the 2023/2024 Financial Year totalling $103.8 million. He added that the Community had also finalised and submitted to the African Continental Free Trade Area (AfCFTA) Secretariat the EAC offers for tariff and services liberalisation.
“This facilitates trade between the EAC Partner States with other African countries under the AfCFTA framework. Additionally, three of the EAC Partner States are participating in the AfCFTA Guided Trade Regime, which involves match-making of firms ready to trade within the AfCFTA framework,” he said.
In the 2023/2024 Financial Year, customs will, among other things, focus on consolidating and updating the regulatory framework for the Single Customs Territory to ensure the sustainability of the gains made so far. Moreover, they will integrate the Electronic Cargo Tracking Systems along the Transit Corridors and enhance the interconnectivity of systems in key sectors to facilitate information exchange.
EAC States will be keen to continue implementing mechanisms to enhance intra-EAC trade while actively participating in the negotiations at the Tripartite (COMESA, EAC and SADC) and at the AfCFTA.