CROSS-BORDER

Border post trade still informal despite simplified procedures

TradeMark E.A reports cost savings of about $240 (Sh24,950) annually by a single trade through the Simplified Trade Regime.

In Summary

•About 47 per cent of women in cross border trading still use informal routes, an East African company in advocacy for trade has said.

•Majority of traders are unaware of the simplified certificate of origin (SCOO), exempting consignments of goods that originate in the EAC and valued under $2,000 (Sh207,920) from payment of import duty in the EAC destination country.

Fish traders showcase their products at the first fish exhibition in Busia town
Fish traders showcase their products at the first fish exhibition in Busia town
Image: JANE CHEROTICH.

About 47 per cent of women in cross border trade still use informal routes, according to a company focussed on East Africa trade integration. 

This equates to more than half of the businesses, where 80 per cent of trading is run by women.

According to TradeMark East Africa, the majority of the traders are unaware of Simplified Trade Regime (STR) on customs procedures and documentation, hence avoiding formal border posts leading to a higher cost of business.

 
 

STR, provided under the EAC Customs Union, is aimed at attracting small traders transacting regularly in low-value consignments.

The provision enables simplified certificate of origin, exempting consignments of goods that originate in the EAC and are valued under $2,000 (Sh207,920) from payment of import duty in the EAC destination country.

The simplified trading regime for cross border traders has seen 13,000 women transit from trading using informal routes to formal border crossings.

Initially, the certificates of origin were done through revenue authorities delegation, but now this has been decentralised to women trader associations and joint border management committees,” TradeMark EA business competitiveness senior director Waturi Matu said during the company's sustainable and inclusive aid for trade symposium 2019.

Trade Mark E.A reports cost savings of about $240 (Sh24,950) annually by a single trade through the system.

Before the STR, the traders paid $2 per day depending on the assortment of goods.

 
 
 

The cross-border trade strides from major border posts including Malaba, Moyale border, the port of Mombasa and along Northern and Southern Transport Corridors with the women spending an average low capital investment of $500 (Sh51,980).

 
 

Major traded commodities are finished goods, semi-processed goods and raw materials especially cereals and agricultural produce such as maize, beans, groundnuts, bananas, fruits, carrots, French beans.

However, the periodic export bans have constantly become a challenge for the traders despite the introduction of a national monitoring committee for tracking and reporting non-trade barriers .

Currently, there is an expected export ban on maize from Tanzania which has sufficient stocks and will have to redirect the surplus to southern African markets in Malawi and Mozambique.

A market assessment report by the Eastern African Grain Council presented to the Ministry of Agriculture in August showed that Uganda, and Kenya may have a grain deficit due to delayed rains, implying impact on the cross-border trade for the commodity.

The report said there will be an expected production decline of 10 million bags in Kenya.

Uganda is expected to limit their ability to supply the deficit countries within the region, which could severely constrain both formal and informal regional trade flows.

"The cost of imposing an export ban removes a huge constituent from the trade distribution network while enforcing a standard locks traders who are even not aware out of the trade," Matu added.

She said the discussions on the Non Tariff Barriers are ongoing with a priority to resolve through dialogue, the intervention of public officials or a sitting at EAC Secretariat in Arusha, Tanzania.

Information on the market has been indicated to a key driver for trade, however, the access to data remains a test. The study also showed that the women spent five per cent of income to access information.

“The problem is that there is a lack of information on how much of a commodity is available or is needed in the market,” she added.