Traders growing impatient over delayed benefits of East Africa common market pact

At an open air market in Uganda, five kilometres from the common border with Kenya, Careen Anyango cuts her phone conversation short to guide men loading sacks of mangoes and pineapples onto waiting trucks.

The mangoes are packed in 90kg sacks and transported to markets in Eldoret, Siaya and Bungoma.
Ms Anyango who has been in the business for the last 11 years is unhappy about operating environment, which she says is getting worse, the reverse of her expectations two years ago when the EAC common market protocol was born.

Not only are the farmers asking for a higher price, citing an increase in the cost of inputs, Ms Anyango says the costs of moving the goods through the border are eating into her profit margins. “We were told that the implementation of the common market protocol two years ago would mean that taxes we pay would drop but instead they have been increased” she said.

Ms Anyango narrates the hurdles that traders go through. “Uganda has a better variety of mangoes and we buy a 90kg bag at between Sh800 and Sh1000 depending on the season.”

She continues: “When we get to the Ugandan exit border post, the custom authorities charge Sh20 per bag of mangoes. This is a reasonable price compared to Sh100 on the Kenyan side.” Apart from the payment, Ms Anyango says traders are forced to bribe officials for the consignment to be cleared.

Even as the East African Community last week celebrated the second anniversary of the implementation of the common market protocol, Kenyan and Ugandan traders are unsatisfied with the pace of integration of the five-country bloc of 133 million people whose GDP, according to market prices, is estimated at $79.2 billion.

Most traders on either side of Malaba border town complained that corruption, lethargy and discriminatory taxes are still making it difficult to transact business freely.

Fito Michael, a Ugandan trader who exports eggs to Kenya told the Business Daily said fees payable to the Kenya Revenue Authority and the Kenya Plant Health Inspectorate Service (Kephis) have made the business unattractive.

“In Uganda, a tray of eggs goes for Sh250 and we take this across the border into Kenya where the same retails for up to Sh360 in the nearby towns of Western Kenya,” he says.

Consumers in Kenya end up paying a unit price of Sh12 for the eggs and Mr Fito says that this price can be lower were the costs manageable.

“When we come in at the border we pay Sh10 to KRA for every tray of eggs. We add Sh3 for each tray to be inspected by Kephis, which we feel is double payment since Uganda inspects us and gives the green light. An additional Sh2 is paid to the council authorities at the markets where the eggs will be sold.”

Mr Fito says traders factor in these costs in the price they charge to cover other expenses like transport and the profit margins.

The East African protocol that was ratified on July 1, 2010 was expected to harmonise trade within the region by providing free movement of labour, goods and services among the member states of Kenya, Uganda, Tanzania, Rwanda and Burundi.

A report released recently by the East African Business Council (EABC) indicates that the business community in all the member states is facing several hurdles that are slowing down integration of the East African Community.

The East African Community Business Climate Index (EABC-BCI) 2011 report, launched in Arusha says customs procedures and administrative requirements are the most severe among the non-tariff barriers followed by police, weighbridges and immigration.

Perishable goods

EAC Secretary General Dr Richard Sezibera who spoke at the event stated that although the implementation of the regional customs union has led to a 67 per cent growth in intra-trade among the EAC member states, this growth is being undermined by non-tariff barriers.

Non-tariff barriers, according to the report, lead to increased costs of storage and labour, loss of business opportunities and wastage in terms of perishable goods.

Non-tariff barriers are sometimes justified as protection for home industries and are believed to reduce revenue loss.

However, most of the traders and businessmen at either side of the Malaba border town who spoke to Business Daily said some barriers are “totally ineffective and needless.”

Musa Nantondo, a driver from Uganda who was transporting a container of secondhand clothes from Mombasa to Kampala said delays at the Malaba border post sometimes cause truck queues as long as 20km.

“Between Amagoro and the border crossing at Malaba there are four roadblocks,” he says. “This is a distance of about 10 kilometres and even having two roadblocks is too much.”

Mr Nantondo says that at every roadblock, the police ask for bribes and the crew is forced to comply or risk detention “on flimsy offences when it gets at the border crossing.”

Apart from the hefty bribes they have to part with, truck drivers complain that customs authorities especially on the Uganda side are slow in clearing the trucks.

“Sometimes we have to wait for up to five days before we can move into the country ad at this time we pay Sh400 for parking each day,” he said.
However, not all is doom and gloom at the border towns and the integration process has brought with it some benefits.

An immigration official who spoke on condition of anonymity because they are not allowed to speak on the matter, said the last two years have seen a great increase in the number of citizens crossing the border from either side.

“Since visa requirements among members of the EAC member states were waived we are seeing many people moving across the border to look for employment opportunities across teh borders,” he said.

Free movement

“Aid workers, lecturers and truck drivers are some of the people who have greatly benefited from the free movement of labour and despite working 24-hour shifts, we are still overwhelmed by the number of people seeking immigration services.”

This has, however, presented a security challenge especially in the recent spate of grenade attacks in Nairobi, Mombasa and Garissa.
Border towns like Malaba have been identified as weak security spots and this has put a lot of strain on officials to screen all travellers entering or leaving the country.

“There is a free movement of people, we still cannot take any chances especially in the wake of terror attacks in Kenya and we have to scrutinise everyone and this takes time and at times means more delays.”

However, Business Daily learnt that Kenyan travellers moving into Uganda are taken through a more rigorous security check than those moving into the country from Uganda.