High costs slow down bid to control EA cargo business

The cost of engaging in cross-border trade has spiralled in Kenya to nearly double charges in Tanzania, putting a speed bump on the country’s bid to control East Africa’s logistics business.

It costs an average of Sh200,695 ($2,255) for a firm based in Kenya to export a 40-foot container and Sh209, 150 to import same cargo size, the World Bank’s Doing Business 2015 shows. The survey shows that Tanzania, the only other East African state with a seaport, charges just Sh97, 010 ($1,090) to facilitate export of a standard container and Sh143, 735 to import one.

“Tanzania has invested in port infrastructure. New cranes, a conveyor belt and anchorage tankers at the port of Dar es Salaam helped reduce berthing and unloading time as well as congestion,” notes the survey released last week.

It adds: “The reduction in the time required for port and terminal handling activities benefits not only traders in Tanzania but also those in the landlocked economies of Burundi and Rwanda that use the port.”

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Kenya has been on an aggressive reforms drive to boost efficiency at its transport corridors and attract landlocked traders to Mombasa Port.

Under a recent pact signed with Uganda and Rwanda, Kenya has significantly reduced regulatory barriers and initiated a number of programmes to boost efficiency along the Mombasa-Malaba road. It now takes about five days to clear goods from the port of Mombasa to Malaba with transporters going through only two road blocks and two weighbridges. In 2013, a trip from Mombasa to Kampala took 10 to 20 days.

The country has also introduced a single electronic window system for lodging trade related documents and also piled up pressure on RVR to improve rail service and raise the level of cargo that it hauls to and from the hinterland.

At the port of Mombasa, recent efforts such as construction of Berth 19 and additional dredging of the Port to allow access for larger vessels have significantly raised its efficiency.

Despite the reforms, the World Bank survey ranks Kenya behind Tanzania in facilitating cross-border trade. It takes 26 days to conclude an export or import business in Kenya with a trader filling eight and nine documents respectively.

By comparison, it takes only 18 days to conclude export and 26 days for import in Tanzania with traders being asked to fill seven and 11 documents respectively. The cost of logistics in Kenya and Tanzania account for a significant portion of costs incurred in landlocked states such as Uganda, Rwanda, Burundi and DRC.

Among the landlocked states of East Africa, Rwanda is the most expensive state to engage in cross-border trade, with export costing Sh288, 805 ($3245) and import at Sh444, 110 per container.