Beyond Funding: Strategies for Overcoming Cross-Border Trade Challenges in EAC
The African Development Bank (AfDB) has granted the East African Community (EAC) $1.4 million through the New Partnership for Africa’s Development and Infrastructure Project Preparation Facility (NEPAD-IPPF). This funding is allocated for the feasibility study of the Multinational Kenya/Uganda: Kisumu-Kisian-Busitema-Busia Expressway Project, a crucial part of the Northern Corridor facilitating trade from Mombasa to Burundi, Democratic Republic of Congo, Rwanda, and Uganda.
Currently, the road sections involved in the project are congested two-lane single-carriageway bitumen sections, leading to increased travel times and operational costs. The feasibility study aims to assess the economic viability of upgrading these sections to expressway standards. The project is a priority for EAC Partner States, expected to contribute to essential economic infrastructure development in the region. The grants set a good ground in addressing the Infrastructural challenge of the cross-border trade in East Africa. However, there are several challenges that cross-border trade faces.
The challenges of the cross-border trade in EAC
The main challenges faced in trade facilitation within the East African Community (EAC) include inadequate infrastructure, operational inefficiency at the borders, government policies and regulations, human resource issues, and cultural issues that result in poor coordination, antagonistic relationships, and corruption.
The presence of several barriers and the lack of coordination among multiple government agencies on both sides of borders contribute to the challenges faced in trade facilitation within the EAC. Furthermore, the duplication of procedures at each border, the lack of harmonized rules and regulations, and the lack of computerized customs management systems result in lengthy and inefficient manual operations carried out by traders and officials at borders.
The costs associated with transport and logistics also affect trade within the EAC, with pecuniary costs such as customs fees or transit permits, as well as time costs spent on paperwork, permits, and administrative fees, adding to the total trade cost. The EAC faces challenges related to non-tariff barriers, such as the lack of coordination of different agencies at borders and non-harmonized rules and regulations applied by national authorities.
“Streamlining customs procedures and harmonizing regulations across EAC member states can help reduce the bureaucratic burden on traders and facilitate smoother cross-border trade.”
The challenges faced in trade facilitation within the EAC are multifaceted, encompassing issues related to infrastructure, operational inefficiency, government policies and regulations, coordination, and the presence of barriers and non-tariff barriers. That is, the grants from AfDB will improve the infrastructure but other challenges may still hinder the trade facilitation.
Minimizing the challenges of trade facilitation in EAC
On top of what AfDB gave to EAC, there is a need for more to be done. That includes streamlining customs procedures, harmonizing regulations, and enhancing coordination among government agencies.
Streamlining customs procedures and harmonizing regulations across EAC member states can help reduce the bureaucratic burden on traders and facilitate smoother cross-border trade. This can involve the adoption of electronic customs management systems, and the implementation of common customs procedures and regulations.
Enhancing coordination among government agencies at borders is essential for reducing duplication of procedures and improving efficiency. This can be achieved through the implementation of computerized customs management systems, as well as the establishment of time-bound programs for the elimination of non-tariff barriers, with regular monitoring and reporting mechanisms in place.
The solution is above the funds.
Funding is one of the important parts of the EAC to reach its goals. However, without addressing the non-financial challenges the goals targeted will be impossible to achieve regardless of the good infrastructure we may have. That is, depending on finance only, EAC may experience the problem of White elephant projects. White elephant project is a term that describes large and expensive public infrastructure or development projects that, despite their grand scale and cost, fail to deliver the anticipated economic or social benefits.
Yes! EAC will also need funds to improve the central corridor. If the challenges listed here are solved the funds for improving the central corridor will come from the internal sources. If that happens then the EAC will be among the successful regional integrations.
A reminder
Removing the challenges of trade facilitation within the East African Community (EAC) can improve the economic livelihoods of traders, both formal and informal, by expanding market opportunities and reducing the time and resources spent on completing paperwork and administrative procedures at borders. The removal of non-tariff barriers can make importing and exporting goods less difficult, leading to increased trade and economic growth within the EAC.
Addressing the challenges of trade facilitation can reduce business costs, delays, and inefficiencies associated with border checks, ultimately enhancing competitiveness and promoting smoother cross-border trade. The funds are important but let’s avoid white elephant projects. This can be avoided by addressing policy, regulation, and operational challenges.
