The TradeMark East Africa Challenge Fund has launched a $16 million fund for innovators who develop strategies and products that can help reduce the time and cost of transporting goods and services across East Africa. The fund, dubbed Logistics Innovation for Trade (Lift), will offer grants ranging from $200,000 to $750,000 to winning proposals from innovators globally.
Lift is aimed at helping develop new technologies that can lead to a 15 per cent reduction in the time and cost of transport on the Northern and Central Corridors by 2016, ensure better co-ordination of the logistics chain and come up with business models that help small and medium enterprises to participate in the logistics chain.
The fund is also meant to develop new services, including information and communications technology (ICT), to help buyers to find the right suppliers and facilitate more efficient logistics, improve financial services, provide training, and document how to reduce red tape and enforce standards in the industry.
TradeMark East Africa Uganda director Allen Asiimwe noted that trade across the region is growing at a rate of eight per cent per annum, and emphasised the need to reduce the cost of transport and transit times on the main transport corridors.
“The high cost of freight and transport erodes the competitiveness of goods exported by the East African countries, raises the cost of living and reduces trade, economic growth and job creation,” Ms Asiimwe said.
Data from TMEA shows that East Africa has the highest freight and transport costs in the world. For the landlocked countries, transport costs can be as high as 75 per cent of the value of exports.
Lift fund manager Isaac Njoroge said only private companies in the transport and logistics industry in the EAC and those providing services to it are eligible to apply for the grant. Executives of logistics firms in Uganda welcomed the grant but said it will only be useful if non-tariff barriers are eliminated.
“Unless non-tariff barriers are eliminated, nothing much will improve,” said James Byenkya, operations manager at Ataco Freight Services Ltd.
Paul Lugobe, operations manager at Uganda’s Freightnet Ltd, also called for an upgrade of roads across the region.
The fund comes at a time when the EAC states are implementing a Single Customs Territory that is expected facilitate faster movement of goods and ease the cost of doing business in the region.
Since its inception in 2012, the TMEA Challenge Fund has supported other trade innovations worth $10 million, including the recently launched Airtel cross-border money transfer scheme and the Africado Ltd project in the Kilimanjaro region of Tanzania.