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Monday, 30 November 2015

Transport costs in East Africa 60% higher than in US and Europe

East African states have made considerable efforts in recent years to reduce the cost of doing business and boost intra-regional trade. There have been investments in large infrastructure projects, such as the expansion of ports and construction of highways; the introduction of one-stop border posts; and measures to ease the movement of goods and people across borders. But despite these efforts, the cost of doing business across the East African Community (EAC) remains high. Nairobi-headquartered TradeMark East Africa (TMEA) was established in 2010 with US$560m funding from a range of development agencies with the aim of improving trade in the region. TradeMark East Africa (TMEA) works with EAC institutions, national governments, and business and civil society organisations. How we made it in Africa spoke to TradeMark East Africa (TMEA) chief executive Frank Matsaert about the progress made in reducing trade costs, how to stop corruption, and the significance of informal traders. Below are edited excerpts. Businesses often complain about high transport costs in East Africa. Are things getting any better? The transport costs in East Africa are on average still about 60% higher than in the US and Europe. Landlocked countries like Rwanda, Uganda, South Sudan and DRC can’t export much because the costs are just so high. The high trade cost is holding back these economies. We aim to solve these challenges through initiatives that increase physical access to markets, enhance the trade environment, and improve business competitiveness. One of our targets is to increase trade by 10% by the end of next year and we are on track to deliver that. We also aim to reduce the time it takes to move goods around by 15% and so far we have achieved 12% of that as a direct [result] of our work. When we started back in 2010 it took 18 to 20 days to get a container from Mombasa (Kenya) to Kampala (Uganda) by road. Now it can take around eight to 10 days. There has been a silent revolution in logistics and a lot of companies that couldn’t trade before are now able to trade because the costs have fallen a lot.

Source: TradeMark East Africa