Barriers in transportation of goods scare off investors

By John Oyuke

East African Community (EAC) countries are under pressure to create an attractive investment climate for businesses by breaking down barriers hindering smooth transportation of goods.

Investment Climate Facility for Africa (ICF) Chief Executive, Omari Issa believes while it is important to fix roads and railways, huge distortional costs of doing business are locked in bureaucratic procedures.

Mr Issa says it is critical for governments to jointly address all fundamentals of doing business to increase investment in East Africa and ensure the region can weather economic storms in the long term.

"Investor perceptions of a country or region are greatly influenced by first hand experiences of doing business. Where they encounter lengthy and inefficient processes, they are likely to look elsewhere," he said.

Issa was speaking during a Regional Forum on Customs Reforms in Arusha, Tanzania at the weekend. The forum provided EAC partner states with an opportunity to develop ways that will ensure it can better weather economic storms — such as posed by the receding global financial crisis in the long term.

Issa said agencies including customs, police, ports, standards inspection agencies and Northern and Central Corridor Authorities, should work together to remove excessive inspection and clearance procedures.

"Through collaboration and harmonisation of systems and procedures, we can make significant progress in reducing transit times and costs traders incur along the Northern and Central Corridors," he said.

A lorry journey undertaken by researchers from Rwanda Private Sector Foundation in July last year identified some of the barriers along the corridors as duplication of procedures and paperwork to clear goods.

Other obstacles are excessive physical inspection of goods and official approvals, lack of harmonised management or IT systems, poor quality physical infrastructure and corruption at roadblocks and weighbridges.

Issa said in focusing on increasing investment, there is need to speed up trade along the region’s critical corridors, on which an estimated 80 per cent of the trade carried out within East Africa depends on.

The trade worth about $560 billion per annum depends on the imports and exports that pass along Northern Corridor between Mombasa and Kigali and Central Corridor between Dar es Salaam, Kigali and Bujumbura.

"These corridors are the life-blood of EAC partner states, especially for landlocked Uganda, Rwanda and Burundi," Issa stated.

Trade along these corridors is severely hampered by congestion and delays at the ports, on the roads and at border posts, making the region one of the most expensive part of the world through which to move goods.

Available data shows that a typical container may cost about $3,000 to transport by land from Mombasa to Kigali — twice the cost of shipping it all the way from Singapore or Malaysia to Mombasa.

In addition, it takes four days for a truck to get through the northern corridor and six through the central corridor if not much longer.

The ICF boss noted that each day’s delay for a typical truck costs its owner approximately $400 and each day’s delay for a ship berthed in the port costs its owner about $25,000.

"The high costs of importing goods and materials substantially raises the cost of doing business in EAC and makes it very tough for business to produce goods or provide services that can compete on world markets," Issa said.

 

 

Read all about: EAC

 

 

|   |    |    Comments (0) |   Add Comment

---