Opening Borders for East Africa’s Traders – and Doing It Sustainably
Improving intra-African trade is increasingly on the radar as a crucial factor in the continent’s sustainable development, and donors are getting involved to support public-private dialogue and provide technical assistance. We hear from TradeMark East Africa’s Annette Mutaawe Ssemuwemba on reducing barriers to trade, ensuring sustainability, and the impact this work is having on women traders.
It used to take an incredible 45 working days to transport goods from the Kenyan port of Mombasa to Rwanda, passing through Uganda, a distance of approximately 1,450 kilometers. “You can imagine how expensive that was,” said Mutaawe, Chief Strategy and Results officer at TradeMark East Africa (TMEA). She has dedicated her career to trade facilitation, working on the public, private and donor sides of the issue, and has seen some dramatic improvements. That shipment time is now down to eight days and counting.
This makes a huge difference for traders in delicate or perishable goods which were getting damaged or ruined in transit. “And think of the difference for businesses who were having to ensure sufficient inventory as you wait for your shipment to come through; and the cost of people working across the chain, just following up on the shipment,” said Mutaawe. For more information on the EU’s investment in the Northern Corridor, click here.
The improvement is also due to the hard and soft infrastructure improvements supported by TMEA. Named for Trade and Markets, the agency is funded by the EU plus six member states, the US and Canada with a pot of $560 million for 2010-17. It focuses on improving trade competitiveness and expanding domestic and regional markets for the East African Community. “We have projects that are aimed at increasing physical access to markets; ensuring infrastructure is in place; that ports are working efficiently; to improve the capacity of ports, their entrance and exits,” said Mutaawe.
That route from Mombasa to Rwanda used to include eight weigh-bridges and various roadblocks where consignments could be held up. Now the roadblocks are gone, and only one weigh-bridge remains. “All that is history now, as a result of all the work we supported through partnerships with the government and private sector,” said Mutaawe.
Just as significant are the improvements to soft infrastructure, such as setting up single windows at customs that allow traders to access and supply information in one place. “They’re low value programmes, but very high impact,” said Mutaawe. “Usually after setting up the system and getting users trained, the maintenance costs are low, and it’s easier to ensure the system remains running efficiently.”
Bananas to Textiles - What do these changes mean for traders?
TMEA has made a difference to thousands of small cross-border businesses by supporting the simplification of customs processes and translating them into local languages. “Take a woman who was trading in bananas across the Rwanda – Uganda border,” said Mutaawe. “They’re perishable - so every time she couldn’t cross the border she lost a whole consignment of ripe fruit.”
By using the simplified trade regime, traders like Afsa Uwingabire (see video below) can now cross the border without customs delays, as long as the consignment of goods is worth less than $500. It not only decreased her journey time, but enabled a change in her business plan. “She understood she didn’t have to be limited to a low value commodity, as long as it was within a certain amount; and she has been able to move from bananas to textiles, a higher value product. She moved from making $20 [per trip] in bananas to $500 in textiles. That’s a fundamental story of change,” said Mutaawe. “She has more disposable income; she can take her children to school; she can contribute to household expenses.”
TMEA is also pushing for better infrastructure at crossing points. 500 women cross the border between Rwanda and DRC every day, but “without any facilities for rest, they spend the night at the border on the bare ground so they can cross in the morning, trade, and come back in the evening,” said Mutaawe. “With new infrastructure, they’ll have a decent place to rest, and washroom facilities. If we can help them cross faster, more efficiently, that will make a fundamental change.”
Around 8,000 women traders have benefited from the initiatives so far. “Women face a lot of challenges in business; it’s a marginalised group in terms of their access to information, their ability to cross borders; discrimination and harassment. It brings lots of emotions when you see the change that happens in the life of a woman, just because you’ve opened a border post to enable her to trade easily across the border. Those incomes trickle down to families and children. They’re not expensive programmes, but it’s very impactful,” said Mutaawe.
Lessons learned – starting with sustainability
TMEA has branches in the five East African Community countries, Kenya, Uganda, Tanzania, Burundi and Rwanda. “We don’t work from headquarters, we go down to the ground, we get involved,” said Mutaawe. And that, she believes, is one of the key factors in the initiative’s success, encouraging ownership and buy-in from all the stakeholders from the outset.
Interventions, such as reducing transit time from the port, begin by defining the needs of each country, and the region as a whole. “We brought together stakeholders in discussions to define the needs together. That’s the beginning of the ownership process. Then allocating responsibility; who would do what for certain changes that had been defined,” said Mutaawe. “As the partners that brought financing, we came in to support a process the partners already owned, and that really helped. We work closely with border agencies and revenue authorities, and the main users of these facilities, to deepen that sustainability and help them manage these facilities,” said Mutaawe. “We’ve learnt that defining the right partnerships is key to success.”
One important factor is working with partners which have their own funding sources in place, such as government agencies, so they can continue running into the future. When TMEA invests in hard infrastructure such as roads, they never provide 100% of the funding. For a recently-built road between Rwanda and Uganda they went half-half with the governments, which ensures the road is part of their national road development networks. “That means it will continue to be publicly maintained into the future,” said Mutaawe.
When TMEA provides funding to partner organisations, “we might stagger our financing, starting with more in the first year then less the next year, encouraging the institution to develop its own way to raise revenue.”
In terms of the sustainability of ‘soft’ interventions, TMEA encourages capacity-building programmes within teams. “When we do technical assistance, we ask for a mentorship programme with young professionals, which means they can learn from experts and can take on responsibilities,” said Mutaawe. “We also challenge business membership organisations to develop sustainability plans and to show us how they are being implemented.”
Three more lessons learned were the importance of political will, accountability and understanding the change process. A key part is “speaking to politicians; explaining the need and making sure everything we did was aligned to the national development plans of the countries,” said Mutaawe.
Then, “every so often we go back to explain the improvements that are happening; and the tangible impacts; taking people to the border posts to show them the changes that have happened.”
Finally, “you must understand the political economy of the environment in which you’re operating, and define the measurement of results – we’ve learnt you have to define, and be clear about the change you want to see; as a change process is complex and takes time, but the resources we get are meant to be utilized within a defined period, so how you understand that change over time is very important.”
TMEA’s Strategy One is coming to an end, but Strategy Two is likely to receive the requisite funding to continue from 2017-24. “That’s exciting for us, as it allows us to have a deeper impact in the region, and tackle issues that add to what we’ve done in Strategy 1; and generally to keep the region vibrant and more competitive,” said Mutaawe.
She pointed to non-tariff barriers as a key area in need of more creative thinking (“eight days is not acceptable; we must work even harder”), as well as standards and harmonization. Infrastructure to connect the trade corridors is also high on the list. “There’s still a lot to do to reduce the costs of doing business, and reducing the time as well,” said Mutaawe.
Then the success will be down to the response from the private sector. “It’s one thing to have these infrastructure facilities in place, but if there’s no goods going through, we haven’t gone our job well,” said Mutaawe. The end result should be “more commodities on the market in East Africa; more people joining business and trade; and reducing our trade deficit, having more exports and less imports coming in.”
TMEA has been described as the largest and most effective Aid for Trade programme, and is already sharing its expertise and best practices with other regions. “We had a mission from West Africa, which came to East Africa to understand the interventions, the governance structures, helping them to make it happen for their own region,” said Mutaawe.
“We were the first kind of programme that pulled resources together from various donors, and we’re now an example of a successful initiative through donor coordination, and we hope we can share our lessons and learning with a global audience,” said Mutaawe.
Which other areas does TMEA address?
TMEA’s initiative complements the EU’s broader support to trade facilitation initiatives for developing and least developed countries. These measures range from simplifying and harmonizing import, export and transit procedures, modernizing customs management systems, coordinating border related activities of customs administration and developing customs related infrastructure such as One Stop Border Posts. TMEA has successfully assisted the Revenue Authorities in Kenya, Uganda, Rwanda and Burundi to adopt modernized customs systems in addition to facilitating the construction and operationalizing of 13 one stop border posts in the region.
For more of their best practices visit http://results.trademarkea.com
How does this fit into the EU’s broader support for trade facilitation?
The EU adopted a €53 million support project for COMESA's comprehensive Trade Facilitation programme at the beginning of the year. In the field of non-tariff barriers, it will help to upgrade the existing online monitoring, reporting and resolution system and will offer technical support to member states for the implementation of the COMESA non-tariff barrier Regulations. In addition, the programme will support activities related to the implementation of the WTO Trade Facilitation Agreement at five selected border posts. It will also address regional sanitary and phytosanitary challenges, such as aflatoxin limits for maize and maize products and microbiological limits for milk and milk products.
Support is also planned for COMESA’s Small-Scale Cross-Border Trade programme. It aims to increase the formalization of cross-border trade and enhance small-scale cross-border trade flows, leading to increased security and higher incomes for small-scale cross-border traders. This programme includes a strong component on women’s economic empowerment, considering that a large majority of cross-border traders in the region are women. The programme will strive to reduce harassment, corruption and gender-based violence at selected border crossing points.
Furthermore, programmes are under development to support small-scale cross-border trade in the great lakes region (€20 million) and to support the implementation of the WTO Trade Facilitation Agreement in the SADC region (€15 million). At the same time, the EU is developing a market access upgrade programme with the EAC (€35 million), which includes a component on trade facilitation focussing on selected value chains.