Road tolls have again emerged as hurdles to smooth trade between East African Community member countries as each government charges its own fees on trucks moving into its territory.
The region’s business stakeholders are however optimistic that trade in the bloc will increase by 11 percent in 2022-2023 if toll fees and domestic taxes are harmonised to prevent distortion and create a level playing field for businesses.
“We are proposing that EAC partner states charge a uniform fee of $10 per 100km on all trucks the way Uganda does,” said John Kalisa, chief executive of the East African Business Council.
“Once collected, the amount should be used for the purpose for which it was intended — that is to repair and maintain the same roads,” he added. Tolls are usually implemented to help recoup the cost of road construction and maintenance, as well as finance other infrastructure projects.
The $10 charge that the EABC has proposed translates to close to $144 for the region, down from $500.
The anticipated $144 levy is the flat rate across the Common Market for Eastern and Southern Africa (Comesa).
EABC is reacting to complaints by importers who have highlighted the rising cost of doing business in the region occasioned by the varying charges in each member country even as normal cross border trade returns free of pandemic restrictions.
The reopening of the Katuna-Gatuna One Stop Border Post on January 31, 2022, for instance, has seen some 160 trucks cleared daily to cross between Uganda and Rwanda, paying at least Ush470 million ($125,735) in tax collections to Uganda per month. At least 1,000 people cross here daily too.
However, the two countries are charging different road tolls.
“Rwanda charges a fixed rate of $76 for small trucks and $152 for large trucks, while Uganda charges $10 per every 100km,” said Kalisa.
“Tanzania is charging more than $156 per truck, which is very expensive,” he added.
The same applies at the Mutukula border crossing between Tanzania and Rwanda where trucks are also charged different road tolls.
“As the business community in the region we are advocating for a common standardised fee because any variation distorts trade,” Kalisa said.
He identified Uganda, Tanzania and Rwanda as some of the most affected EAC partner states where different toll fees are distorting intra-regional trade, which is still below 15 percent.
Tanzania — which serves as a gateway to the sea for its landlocked neighbours Uganda, Burundi, Rwanda, the Democratic Republic of Congo, Zambia and Malawi — is charging Ugandan cargo trucks $500 as fees for road repairs and maintenance.
Rwanda has also threatened to levy a similar amount on Tanzanian trucks coming through the Mutukula border crossing. The two countries are in discussion over the same.
“There is a need to harmonise road tolls across the region and we are glad that the EAC Secretariat and respective ministries have been tasked to hasten harmonisation of road toll fees in the region,” said Pascal Bizimana, commissioner general Rwanda Revenue Authority, when he held talks with the EABC last week.
Mid this year, Tanzania announced plans to cut road toll by about 71 percent on Uganda-bound cargo trucks, as part of an agreement reached at bilateral talks between Presidents Samia Suluhu Hassan and Yoweri Museveni.
However, the plans are yet to be effected.
The harmonisation of the toll fee is expected to reduce the cost of doing business.
Transport and logistical barriers to regional trade are estimated to cost East African economies between 1.7 percent and 2.8 percent of gross domestic product every year.
Trade liberalisation and improvements to infrastructure will help reduce these costs, creating ease in doing business across the region and in turn benefitting consumers through lower prices.
The EAC has been tasked with harmonisation of toll fee on the Northern Corridor (1,700 km long) that begins at the Port of Mombasa and serves Kenya, Uganda, Rwanda, Burundi and Eastern DRC.
The Central Corridor (1,300 km long) begins at the Port of Dar es Salaam and serves Tanzania, Zambia, Rwanda, Burundi, Uganda and Eastern DRC.
The improved infrastructure is expected to have a large knockoff effect in poverty reduction in the region through trade-induced changes in prices while reduction in border delays and costs will cut the overall cost of investment for businesses.