Reducing Barriers to Trade

Transit Corridor Efficiency
The high cost of transport is one of the key barriers to trade on the African continent.  In fact, a recent World Bank study found that a 10% reduction in the cost of transport on the continent would lead to a 25% increase in trade. While transport prices in East Africa are lower than in West or Central Africa, it still twice as expensive as it is in the United States, even with the low cost of labor. 

Transport in East Africa is plagued by a number of delays that slow down performance in a “just-in-time” trading environment.  Inefficiencies along trade and transit transport corridors impact negatively on the trade and overall economic competitiveness of the countries of Eastern and Central Africa (ECA).  It is a challenge for these countries to be effective players in regional trade and in the global market place. 

Delays are caused by among others, poor condition of physical transport infrastructure (ports, roads, railways, border posts); poor transit facilitation; limited use of technology; limited use of through transport logistics solutions; and limited political will to rise above national interests in favor of broader regional solutions.

COMPETE’s key activities are:

• Efficient  Transit Corridors
  • Northern Corridor from Port of Mombasa in Kenya
  • Central Corridor from the Port of Dar-es-Salaam in Tanzania
• One Stop Border Posts
  • Consolidating customs /border crossing procedures and putting everything under one roof can help make border crossing more efficient.
  • One Stop Shop border crossing has been introduced at the Kenyan Ugandan border at Malaba.  Clearance times for goods travelling between borders reduced from 3 days to 3 hours.
• Customs Modernization
  • The Revenue Authorities Digital Data Exchange (RADDex) software program helps customs authorities from opposite borders share customs information while maintaining security and integrity of their individual systems.
• Road Customs Transit Guarantee
  • The COMESA Regional  Customs Transit Guarantee (RCTG) is being developed to bond goods on a regional basis instead of country by country.

Trade Policy
Time-consuming bureaucratic procedures, red tape and contradictory trade policies that differ from country to country make it difficult for companies to trade good across the region. Sanitary and Phytosanitary standards and other quality standards also vary from country to country. 

By addressing inconsistencies and contradictions in trade policy, COMPETE aims to improve transit efficiency as a means of promoting trade and economic competitiveness for the ECA Region.  In
Implement World Trade Organization (WTO) and World Customs Organization (WCO) policy standards for Regional Trade of Staple Foods

• Provide input to the ongoing work of EAC/COMESA/SADC on implementation of the ‘Customs Best Practice and Trade Facilitation on select corridors.
• Work in partnership with East African Grain Council on the introduction of regional food security management mechanism to address regional ad hoc export/import bans

COMESA Simplified Trade Regime

• COMESA is working with member governments to streamline trade policies for large and small traders. 

Simplifies the customs trading process for the trader and customs official.  Formalizes the trading process, reducing bribes and smuggling.  Xxx on levying correct customs duties.   Clear rules make it easier for all to follow and to facilitiate trade.

The CSTR will allow COMESA countries to collect better statistical data on value and quantity of goods traded.

Access to Finance
Producers, processors, manufacturers and traders in value chains are integral to regional economic development. Often they do not have adequate access to finance.  This is especially true for small producers and Small and Medium Enterprises (SMEs), which account for the largest number of businesses.

Financial institutions need new products and services to better serve the value chain players, and to enable enhanced intra-regional and international trade.

Trade finance is needed to help producers source inputs within the region, to help traders source staple foods, processed foods, and other goods and products for resale, or to assist processors and manufacturers source raw materials, packaging, components, transport, etc.

Some types of Trade Finance include:

• Purchase order finance (POF)/Pre-shipment/Pre-export finance
• International Factoring
• Letters of Credit & guarantees
• Export insurance
• Warehouse receipts

 

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