EAC business plan requires leaders' action

Jun 27, 2013

The visit by Kenyan President Uhuru Kenyatta early in the week with a solid infrastructure agenda has raised expectations about efforts to finally put to rest the never ending impediments to business because of Kenya''s central role.


Actions will drive EAC business

By David Mugabe

The visit by Kenyan President Uhuru Kenyatta early in the week with a solid infrastructure agenda has raised expectations about efforts to finally put to rest the never ending impediments to business because of Kenya's central role.


Kenyatta's visit, his maiden sojourn into Uganda, follows another by Kenya Ports Authority and Kenya Revenue Authority (KRA) officials last week.

KPA runs the most important trade facility in East Africa - the Mombasa port.

Also, early this week the African Development Bank (ADB) listed its sh12.5b bond on the Uganda Securities Exchange in a ceremony where officials disclosed that appetite for infrastructure financing is driving the need for cash.

If there is anything that the hinterland business community need, it is an end to the impediments to business and the region's competitiveness although discussions on the Great Lakes and geopolitics have a bearing on business as well.

At the centre of discussions in Kampala this week, the three presidents, including Rwandan Paul Kagame, agreed that the EAC will jointly construct the oil refinery in Uganda's Albertine Grabben where Ugandan oil will be processed and expand the pipelines from Kenya to Kampala and Rwanda.

The pipeline will have a reversal mechanism to take oil products from Uganda to Kenya. They will also construct another pipeline between Kenya, Uganda and Sudan to evacuate crude from South Sudan to Lamu.

The other point of agreement is rehabilitating and upgrading the existing railway to standard gauge.

Down south, Tanzania, which was preparing to host US president Barack Obama, is already hot on plans to build the largest port in the region with Chinese support. This will not only ease further the pain of hinterland states but will increase competition and make Mombasa operate more efficiently.

Mombasa question

But currently no other matter sparks revolt among the business community in the hinterland states of Uganda, Burundi, Rwanda, South Sudan and eastern DRC like the question of Mombasa. This was not different last week when KPA met local business community at the Kampala Sheraton Hotel.

Mombasa handles close to 73% (4.8 million tonnes) of Ugandan products in both imports and exports, making Uganda the second biggest user of the port facility after Kenya. The port handles 6.6 million tonnes annually out of Kenya. Uganda also bears the biggest brunt when port inefficiencies and transport barriers step in.

In his directives about the port last week before flying to Kampala days later, Kenyatta directed that all government agencies involved in cargo handling and clearance at the port be coordinated under KPA, while all customs decisions should be made and finalised at the port without further reference to Nairobi, which has caused delays in the past.

He also instructed that all clearing and forwarding companies, Container Freight Stations and banks involved cargo clearance should work 24/7 or have their licenses cancelled.

He added that all weighbridges will be modernized and transit goods weighed at Mariakani in Kenya and sealed will not be weighed or inspected at police roadblocks all the way to Malaba.


Trucks at Mombasa port. The port serves most of the hinterland states

Also, all roadblocks will be replaced by mobile police surveillance, while preferential treatment will be given to goods that are pre-certified. A Kenya Bureau of Standards Laboratory will be constructed in Mombasa and the transshipment bond that brought much admonishment last year to local businesses has been abolished

All sounds well and good coming from Kenya’s fourth president- a man just a few months in his presidency and determined to change things around.

But like in the past, these pronouncements turn out as just grand intentions with nothing implemented as the business community fret at the go-slow state bureaucracy.

“But we have heard this before, we wait to see whether these are turned into action,” said a clearing and forwarding agent.

Turning action to words

KPA officials meeting the business community in Kampala late last week were enthusiastic on changing things around Mombasa in line with President Kenyatta’s directive.

But the true test of Uganda government and Kenyatta’s pronouncements will be in implementation. Kenyatta has already conceded these projects have mostly been talking points for officials with nothing or little following the blue print pronouncements. He conceded this week that it is more of governments which have been an impediment to regional integration.

“The railway issue has been discussed for a long time but with no headway. I am committed to this. If the British did the rail for five years, (why have we) taken over 10 years?” asked Kenyatta.

He acknowledged that the railway is critical for the region’s development and growth “of our people and will reduce the cost of doing business,” adding that it almost takes less time for a container from China to get to Mombasa than from Mombasa to Kampala.

There is much to be positive about, according to a top transport union boss in Kampala, who says Kenyatta has demonstrated some business sense by the nature of his cabinet which consists more of business executives than career politicians.

Museveni has pushed the EAC agenda even with local business fearing for years that they would be swallowed by the bigger neighbour.

Since the commencement of the customs union that allowed unabated movement of goods made within the region, Uganda enjoyed special treatment where some 139 products used as industrial inputs entered Uganda from outside the EAC. The reduction of these industrial inputs known as the ‘Uganda List’ barely two weeks ago from 139 to 49 in line with common external tariffs is another illustration of the “bring-it-on” attitude.

It means Ugandan manufacturers must now tussle it out with the Kenyan manufacturers with no protection - a blessing because local standards must be raised.

The three presidents have sent a strong signal with the formation of a joint commission to follow up on the progress and report back to the others every two months starting August.

Only time will tell their commitment to implement.

 

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