Investors call for speedy removal of trade barriers

Friday November 23 2012

Trucks await clearance at Katuna along the Rwanda-Uganda border. The East African region suffers great financial loss due to bribes and other non-tariff barriers along transit routes. Photo/File

Confectionery industry investors have petitioned the East African Community member states to urgently eliminate non-tariff barriers (NTBs), which are stifling the growth of the business in the region.

Investors are concerned that the potential of the industry to create employment and contribute to economic growth is being frustrated by NTBs.

Kenafric Industries vice chairman Bharat Shah said NTBs were some of the biggest impediments that have slowed the sector’s expansion in the region.

“We want to see a borderless region after the coming into force of the Common Market Protocol. This is yet to be realised and we ask the governments to work on this,” Mr Shah told Rwanda Today.

The investor said there were potentials in confectioneries business in the region, as the middle class population, the industry’s main target customer base, continues to grow.

Kenafric, one of the leading confectionary makers in the region, has so far invested $110 million in a new production machine in anticipation of increased demand for confectioneries.


The machine, Mr Shah said, makes a range of chewing gums and will increase the company’s annual production of confectionery from 1,500 tonnes to 8,000 tonnes.

“The demand for confectioneries is very high and growing in all countries we operate in. In fact, we have also seen positive results in the Rwandan market,” said Mr Shah.

However, he warned that NTBs erected by various member states is slowing the pace of growth.

The sector also wants the EAC to address the transit cash bond, recently introduced by the Kenya Revenue Authority (KRA).

“The bond issue is bureaucratic, time consuming and also expensive for some businesses. We need Kenya and other countries to address the problem and find an amicable solution,” said Mr Shah.

KRA imposed cash bond on traders transporting goods through Kenya equivalent to the value of their imports. The bond would then be redeemed at the exit border.

The confectionery industry players said the harmonisation of taxes would help eradicate some of the NTBs.

“If taxes and policies are harmonised moving from one country to another will be easy and that will be good for business and employment creation,” said Mr Shah.

Like other Kenyan companies operating in Rwanda, Kenafric is positioning itself as a market leader in the country by contracting three distributors for its confectionary, footwear and stationary businesses.

“The Rwanda market is growing and we believe it will be one of our important markets in the near future. It is a market we cannot ignore,” said Mr Shah.

Investors in the sector also believe that the grand free trade area mooted by the three trade blocs in sub-Saharan Africa will boost intra-trade in the region.

The grand free trade area is expected to result in the mergers of the EAC, the Common Market for Eastern and the Southern African and Southern Africa Development Community.

The new free trade area will incorporate 26 countries and increase market access for East African companies.

Though data shows that confectionery market has been growing in the past 10 years, opinion is divided on the direction the market will take beyond 2015.

The East African region is one of Africa’s most promising confectionery markets as the middle income.

The industry players are pegging their hopes on increasing personal incomes as affordable luxury goods.

The investors are said to be eyeing South Sudan. Other players eyeing the regional market are Mzuri Sweets and Patco Industries. Nestle Foods and Cadbury also have products in the market.