Bureaucracy hurting regional trade, says market report

Strict control of the movement of food items across borders is undermining efforts by East African countries to even out regional trade and build a monetary union.

The high quality thresholds, tedious documentation and open corruption at official border crossing points are blocking movement of cheap foodstuff from surplus areas to deficit regions, market report indicates.

“The traders opt for informal routes to pass their commodities through borders without delay and procedures that are likely to attract additional charges,” says latest market report prepared by East African Grain Council (EAGC).

A survey conducted last month around border towns of Busia (Kenya and Uganda), Mutukula (Uganda and Tanzania) and Gatuna (Uganda and Rwanda) indicates that informal cross-border trade in grains increasedlast month compared to December.

At the Kenyan side of Busia border where officials are said to be strict on moisture content of grains and certificates of origins, among other requirements, huge quantities of maize, beans, wheat, sorghum and millet are traded informally.

The quantity of maize exchanged informally at Busia increased by 71 per cent from 18,206 tonnes to 31,177 tonnes while sorghum increased almost three times from 6,851tonnes to 20,750 tonnes.

“Every effort has been made to ease flow of grains from neigbouring countries as they form an important component of food items that feeds our people,” said Mr Humphrey Mwangi, the director of agribusiness at the Ministry of Agriculture. “However, we can never compromise quality standards.” he told the Business Daily by phone on Wednesday.

For maize to be cleared at official border points, it has to have a moisture content of 13.5 per cent, have the right grain size and must be accompanied by Certificate of Origin issued by custom officials of the country of origin.

But even traders who have met these requirements said their commodities still have to wait for at least two days to get phyto-sanitary certificates from Kenya Plant Inspectorate Service allowing them to cross the border.

Because of these barriers, Kenyans tend to pay the highest price for maize in the region. Data collected by EAGC shows that average wholesale price for maize reached Sh31, 700 ($382) per tonne in Nairobi last week compared Kampala’s Sh22, 000 ($266).

Dr Adrian Mukhebi, an Agricultural economist and founder of Kenya Agricultural Commodities Exchange has a different take on the food price differences across the region.