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Shipping & Logistics

EAC coming to grips with key role rail plays in growth, integration

In East Africa, economic integration tends to progress along railway lines. FILE PHOTO | NMG
In East Africa, economic integration tends to progress along railway lines. FILE PHOTO | NMG 

Sometime last year when a group of Kenyan traders accused Tanzania of making their goods too expensive in its market by collecting the Railway Development Levy (RDL) on them, few bureaucrats paid much attention to the complaints.

Kenya was the first country to introduce the RDL in 2013, which is collected at the rate of 1.5 per cent on home-bound imports.

Unlike Uganda and Tanzania which have borrowed the idea, Kenya started on a wrong footing when it chose to levy the tax on nearly every import that came into its market, including those from the East African Community (EAC).

Through their lobby, the East African Business Council, the region’s traders successfully talked the government out of the tax in 2014 — which they had labelled as one of the non-tariff barriers of the time.

Kenya has a number of trade disputes with Tanzania but some bureaucrats believe collection of RDL is not one of them.

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The officials were somewhat vindicated when a Kenyan team led by trade PS Chris Kiptoo failed to produce evidence to back up their claims.

Tanzania has been categorical that in has been collecting RDL in the last two years and like its other neighbours, it spares imports originating from EAC states.

And so Tanzania’s trade and investment PS Adolf Mkenda told Kenya’s dispute resolution team lead by Dr Kiptoo: “Tanzania does not levy RDL on imports originating from EAC.” Away from bilateral trade disputes, the East African states seem to have realised the positive role that an improved railway link can play in their economic integration.

When Kenya introduced the RDL the aim was to raise cash to cover 10 per cent of the standard gauge railway (SGR) cost after China agreed to take care of the rest of the expenses.

Uganda, which introduced RDL in 2014, also seeks to raise additional cash for its Kampala-Malaba SGR after Chinese Exim Bank came on board.

Tanzania, Johnny-come-lately, set itself a five-year target of raising $14.2 billion both for new rail projects and improving existing lines.

The country is working on three SGR projects starting with a 2,561km line which will eventually link Dar es Salaam with Rwanda and Burundi and a 1,000km line linking its iron and coal mines to the port of Mtwara.

In East Africa, economic integration tends to progress more along railway lines than anything else including shared cultures.

The century old Mombasa-Kampala single gauge track has given Kenya and Uganda more than the dotted lines signed on the EAC treaty will ever deliver.

Conversely, the Tazara railroad which runs from Dar es Salaam to Kapiri Mposhi in Zambia was conceived to deliver more than Tanzania would ever achieve from its dalliance with neighbouring states under the Southern Africa Development Community.

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