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FEATURE STORY

Aid for Trade: World Bank Transport Facilitation Project Boosts Trade in East Africa

July 13, 2011


Editor's note: Aid for Trade aims to help developing countries, particularly least-developed countries, develop the trade-related skills and infrastructure that is needed to implement and benefit from WTO agreements and to expand their trade. The annual Aid for Trade Global Review will be held in Geneva, Switzerland from July 18 to 19, 2011. This story is the first of two the World Bank will be presenting online.

Washington DC, July 13, 2011 --There are familiar frustrations echoed among those working in the trade and transport sector in landlocked African countries: high transport costs, lengthy delivery times, border clearance delays and corruption.

But a $199 million World Bank trade and transport facilitation project in East Africa is improving the trade environment by lowering transit costs and transport times along a key route linking Kenya’s international seaport at Mombasa with Uganda and other landlocked countries in Africa’s interior.

The Bank’s East Africa Trade and Transport Facilitation Project that became effective in 2006 tackles delays, inefficiency and other problems plaguing the corridor. Ameliorating the delays along the route is critical, as trade links are important for these inland countries. Not only does trade have direct benefits, but the corridor brings other advantages to the people in Eastern Africa, including small-scale farmers who can save money using quicker and more efficient transit routes.      

The corridor is a vital trade link for landlocked countries in the region since 95 percent of the goods that are imported into, or exported out of, Uganda pass through the port of Mombasa. The project tries to improving the movement of cargo along the Northern Transport Corridor, which makes its way inland from Mombasa through Nairobi to the Kenyan border at Malaba. After the Malaba crossing, the corridor splits, with one leg going eventually going to Kampala, Rwanda and the Democratic Republic of Congo, and the other leg to southern Sudan.

For example, tea, which was Rwanda’s top export in 2001 and accounted for 25 percent of government revenues, provides employment for thousands of small-scale farmers and other workers.  In Uganda, the manufacture of cooking oil and its export to the region employs thousands and brings tax revenues to the government from business.

Both industries rely on the Northern Corridor – Ugandan companies must import raw materials for oil and Rwandan tea factories must send their produce almost 1,700 kilometers to warehouses and auctions in Mombasa.  Higher transportation costs in Africa cut into farmers’ profits and can result in higher costs for basic consumer goods.

The East Africa Trade and Transport Facilitation Project is being implemented along with complementary projects supported by the Bank and other agencies such as the EU, African Development Bank, Japan International Cooperation Agency and the United Kingdom’s Department for International Development. Most of the work is focused on transit facilitation and improvements to border management, railway, road and other infrastructure.

Changes through the project have enabled the corridor to handle increased traffic volumes and decreased transit times. From 2006 to 2009, trade volume at the port of Mombasa grew at close to 9 percent a year. Most of that cargo went along the corridor, with Uganda’s trade growing over the same period by 24 percent a year on the import side and 22.7 percent on the export side.

The World Bank project has also supported a number of steps, including port security and provided facilities for systems for information sharing among agencies at the Mombasa port, which have lowered processing times.  Efforts at the border have taken two tracks, both involving increased cooperation between Kenyan and Ugandan agencies. 

One involves joint inspections of cargo so that it is only done once, and the other involves exchange of electronic information, so that when cargo arrives at Mombasa, it is transmitted to the border and shared among agencies there.  Efforts are also underway to develop a one-stop border post which will facilitate joint clearance and hence minimize handling time. Previously, cargo took three to 5 days to clear at the Malaba border crossing because shipments were processed by both Kenyan and Ugandan customs and other agencies, separately. 

With the project “work has been simplified and you find that a truck can be cleared within 15 minutes on both sides,” said Benjamin Okware, a clearing agent with Kenfreight Uganda Ltd.

On average, crossing times at the border at Malaba have been reduced from more than three days to three to five hours.  The dwell time at the port of Mombasa is down from 19 to 8 days, and transit time along the Mombasa-Nairobi-Kampala section of the route has dropped from 15 to five days. 

Meanwhile, corruption has historically been common at the several weighbridges – which are in place to help preserve the newly rehabilitated road infrastructure – especially between Mombasa and Malaba.  The corrupt practices and delays added to the high costs of transport which were compounded by poor infrastructure and high fuel prices.

While the project has helped to improve the situation, Bank experts believe that more work needs to be done because there are still problems along the corridor. For instance, the border post still looks congested because there just isn’t enough capacity for vehicles, experts said. Capacity will increase once planned infrastructure has been completed and integrated border management systems are installed and operational.

Still, for some business owners like Robert Byaruhanga, head of logistics for Kyagalanyi Coffee Ltd. in Uganda, the route has been beneficial and saves on transit costs.

“It used to take such a long time, you would, on average, be working with about 40 to 50 days to arrange coffee from Kampala to shipment on a vessel. However, today, we do all that in a space of between 18 to 23 days,” he said.

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