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Border checks, varied rules choke intra-Africa trade plan
Trucks in Malaba on the Kenya-Uganda border. The slow clearance of goods and trucks cost businesses millions of shillings.
Businesses have flagged lengthy border checks and varied quality standards as the biggest threats to Africa’s dream of a seamless market.
Companies in countries participating in the African Union-backed pilot initiative to accelerate trade on the continent said it takes several months to get some of the approvals needed.
The African Continental Free Trade Area (AfCFTA) secretariat launched a year-long Guided Trade Initiative (GTI) in October 2022 aimed at stress-testing operational, institutional, legal and trade policy environment under the envisaged world’s largest single market of about 1.4 billion people.
The programme covers trade in tens of products like tea, coffee, tiles, batteries, processed meat, sugar, pasta, glucose, dried fruits and sisal fibre.
Low clearance of goods
The pilot is being implemented in Kenya, Tanzania, Rwanda, Ghana, Egypt, Mauritius, Cameroon and Tunisia.
Traders, however, say bureaucratic red tape at border posts are erecting bigger bumps for the free movement of goods than the weak transport and logistics capacity.
Africa’s underdeveloped transport networks have been blamed for the rising cost of goods and services by as much as 40 per cent, rendering trade within the continent uncompetitive compared with Europe and other regions.
The businesses gave the example of the first consignment of Kenya’s value-added tea to Ghana which left the country in October last year but only arrived in Tema port in February 2023.
Ms Flora Mutahi, the founder and chief executive of Melvin Marsh International, said she had to wait for about five months for her flavoured tea to get quality test approvals in Ghana.
This is despite Kenya and Ghana being part of the GTI programme.
“If it is taking that long to do standards, you can imagine the kind of challenges we face in accessing markets?” Ms Mutahi told the forum in Nairobi.
“The logistics around getting to the market are cumbersome. These are the barriers we must first overcome.”
From 2021, the African Export-Import Bank (Afreximbank) embarked on a project aimed at developing regional “world-class” quality assurance centres on the continent.
The institution, whose headquarters is in Cairo, Egypt, is largely owned by African governments. It says quality assurance centres are geared at ensuring “made-in-Africa products comply with global standards and technical regulations in order to promote exports and facilitate intra and extra-Africa trade”.
The first centre was opened in Nigeria in December 2022, with Egypt expected to follow suit. Plans have afoot to put up a similar testing centre in Tanzania.
“We are rolling out these testing and certification centres,” Afreximbank’s Executive Vice-President for Finance, Administration and Banking, Denys Denya, said on August 30.
“That will ensure goods meet the standards and can be exported to any country.”
Traders also raised issues with slow clearance of goods on borders.
Estimates show businesspeople incur an average of $450 (Sh65,700) daily when a truck remains at the border.
Afreximbank has also been working on the African Collaborative Transit Guarantee Scheme (AACTGS) with the AU and other regional trading blocs like the 19-member Common Market for Eastern and Southern Africa,0 where the lender will provide transit bonds for goods.
“Goods go through many border posts. You post a transit bond in every country, increasing the cost of doing business and the time it takes,” Mr Denya added.
“We have established a transit bond. If, for example, you want to move goods – say from South Africa to Egypt – you will only need one bond to pass a;; the border points.”
Emerging non-tariff barriers add to Africa’s underdeveloped transport networks.
Trade Principal Secretary, Alfred K’Ombudo, said the biggest task for the AfCFTA secretariat should be simplifying customs procedures instead of eliminating tariff barriers.
“If you want to trade internationally, it’s not just about bringing down tariffs. It is about dealing with borders, transport logistics, shipping and ensuring your goods arrive competitively,” Mr K’Ombudo said.
“It is about ensuring you package your goods according to the requirements of the foreign market and comply with sanitary and phytosanitary needs.”
The realisation of the free movement of people, goods and services under AfCFTA will create the world’s largest single market, with an estimated economic output of more than $3 trillion (Sh438 trillion).
“We must take weak transport and logistics capacity, customs-related delays, rules of origin, import bans, export restrictions, quotas and levies, technical barriers, import permits and other barriers seriously as they ultimately reverse the successes we try to make towards a free trade area,” President William Ruto told a meeting of private and public sector leaders in Nairobi on June 30.
“They may look small, incremental but their total amounts to a reversal of what we are trying to achieve.”
