Kenya goods lose edge in rush for single trade bloc

Kenyan firms are losing billions of shillings in their race to capture bigger slice of the regional market under the hurriedly-crafted pan African economic groupings, a new tracking device indicates.

The recently launched web-based mechanism for tracking non-tariff barriers (NTBs) in Africa indicates that restrictive trade practices are reducing the shelf life and adding between five and 20 per cent more on the final cost of exporting Kenyan products to other African markets.

The rapid pace at which African countries are erecting NTBs to shield their industries after signing preferential trade treaties was exposed at an exporters forum held in Nairobi last week, dashing hopes of a quick realisation of the one-Africa dream.

Firms engaged in any form of imports or exports incur at least Sh280, 000 ($3500) in direct cost of NTB and a further Sh11.6 million ($145,000) per shipment in port delays, indicates the online device launched in early 2009. It is run by consultancy firm Trade Mark Southern Africa.

“These figures are still conservative because they exclude millions of shillings that firms pay to security agencies of countries involved in goods clearance,” Mr Geoffrey Osoro, a senior trade policy expert at the Comesa secretariat told traders in Nairobi last week.

Customs and administrative entry procedures top the list at 56 per cent of the reported NTBs, with illegal charges on imports coming second at 16 per cent.

Others forms of trade restriction common in the region are corruption, technical barriers like standards, permits and licensing and foreign exchange controls.

“Our experience is that as tariff falls, private sector players are influencing individual governments to erect new barriers to shield their industries from competition posed by outside firms,” said Mr Osoro

Countries engaged in preferential trading terms usually apply certain non tariff measures specified under the signed treated to control the pace of cross border commerce as their industries adjust to liberalisation.

Such measures—which include import quotas and stringed quality standard — are usually evoked mainly to protect local industries and consumer welfare.

But these measures have clear elimination timeframes beyond which they evolve into NTBs —the illegal restrictions on products that are otherwise qualified to trade under preferential terms.

“As far as NTBs go, custom officials lead because member countries usually set targets which they can only meet by arbitrarily changing tariff classification for products to raise more money,” said Ms Vonesai Hove, an official of Trade Mark Southern Africa.

In spite of being at an advanced stage of the ongoing regional integration process, exporters said they still spend an average of six days to cross a single national border point with time lost and accommodation costs rising to 11 per cent of freight cost.

The online device tracks NTBs hindering trade among countries in EAC, COMESA and SADC which signed treaties to engage in preferential trade area.

Among these regional groupings, EAC is in a common market which allows free movement of goods, persons and factors of production while COMESA is currently implementing its custom union —the integration stage which gradually opens the national borders for free movement of services.