Borderless trade far from being realised

Despite the realisation of both the Customs Union and the Common Market protocols that have catapulted the region to levels of integration only comparable to the European Union, the promised free movement of people, goods and services in the region remains a mirage.

It is nearly four months since the region “removed” the last of the “transition” tariff bands under the Customs Union, allowing Kenya’s goods to trade freely in EAC partner states after the expiry of the five-year transition period; in another three months, in July, it will usher in the long-awaited Common Market.

Long wait

Despite not being subjected to duty, Kenyan exports to the other member states still reportedly spend weeks at border posts undergoing “inspection” — especially at Namanga on the Tanzania border and to a certain extent at Busia-Malaba on the Uganda border.

Tanzanian Customs officials say they have received no directive from the government to waive import duty.
Other reports from the border say while the Kenya side is ready to open 24 hours, the Tanzania side have actually cut working hours from 6 am to 5 pm — previously they worked until 6 pm — and unconfirmed reports say there are moves to stop working on weekends.

“Even if we open 24 hours, the goods can’t move across because the Tanzania border closes early,” said a Customs official at Namanga who requested anonymity.

A frustrated General Motors chief executive William Lay, who is also the president of the American Business Association in East Africa, said the region simply is not realising the promised benefits of the Customs Union, especially for the motor vehicle industry.

Kenya’s EAC Ministry, however, said that it has not received a formal complaint from the business community about their experience at the borders, with EAC Permanent Secretary David Nalo saying that he has been reading about the issues in the media.

“It was never going to be automatic,” said Mr Nalo, who blamed the lacklustre performance of borderless trading on high expectations and weak institutions.

Mr Nalo admitted that the process of inspection at the borders remains unfriendly to businesses, with goods being detained for weeks at the checking points.

“One of the ideas that has been floated is the creation of a single Customs clearance desk at the point of entry; goods once cleared can move without having to be stopped for further inspection,” he said.

Currently, exports that fall under rules of origin are inspected both at Customs bonded warehouses and at border-crossing points.

Inherent weaknesses

Mr Nalo says that right from the EAC secretariat to the ministries in charge of community affairs across the region, inherent weaknesses have hampered fast-tracking of the free movement of goods and it is unlikely that things will move faster until these missing links are fixed.

EAC Deputy Secretary-General in charge of Political Federation Beatrice Kiraso said that while most of the measures needed to speed up the cross-border movement of goods are already on paper, implementation remains an uphill battle, especially as the EAC Secretariat has no teeth.