Kenya-Ethiopia eye small players to boost trade at new border

Kenya and Ethiopia are now banking on the newly commissioned Moyale One-Stop Border Post to boost trade between the two countries, with a keen eye on small traders.

Operations at the facilities, both in Kenya and Ethiopia , have gained momentum since opening in June with border officials clearing traffic, cargo and persons from both countries now physically located on either side of the border.

While truck movement is still low owing to tariff barriers affecting trade, the two countries are keen to encourage small traders to use the facilities, as growth of heavy trucked volumes builds up.

The two countries are currently trading under the Common Market for Eastern and Southern Africa (COMESA) space, where they each allocate a 10 per cent tariff discount on imports and exports.

A high tariff band of up to 90 per cent has for years seen traders use  porous borders to sneak in goods, something the two governments want to address and make cross-border trade legit through the OSBP.

To boost this, Ethiopia is developing protocols to ease movement of goods by small traders, which includes a favourable tax regime.

“It is a process that is ongoing and we hope it will be concluded soon so that we can have friendly tariffs. We are hoping that the OSB will open up trade between the two countries,” said Abebe Ersumo, Ethiopia's deputy manager, customs operations division at the Ethiopia-Moyale OSBP.

Kenya plans to use the 'COMESA simplified regime' which provides a list of goods that benefit from eased clearance, mainly for small-scale cross-border traders.

“Us we are ready. We welcome the move by Ethiopia and are waiting for it to be in place so that we can trad, with much ease,” said KRA's Joel Ndege, station manager Moyale OSBP and the chairman of the Border Management Committee.

Trade volumes between the two countries have remained low as Kenya trades more with her East African Community (EAC) peers, mainly Uganda, and Tanzania, where there are already fully functional OSBPs.

The Moyale OSBP is expected to boost trade volumes where in 2019,Kenya’s exports to Ethiopia were valued at $67 million (Sh7.3 billion), while Ethiopia’s exports to Kenya were valued at $ 52.05 million (Sh5.8 billion).

A baseline survey by TradeMark East Africa (TMEA) in 2017 had revealed it took on average, 21 hours and 52 minutes (Kenya-Ethiopia) and 12.5 hours (Ethiopia-Kenya) for a cargo truck to cross the border.

This has been reduced to one hour, according to KRA, under the one stop border clearance initiative.

Major exports to Ethiopia from Kenya include Pharmaceutical products, plastics, mineral fuels, oils , distillation products, machinery, nuclear reactors, boilers and household goods mainly utensils.

Imports include leather products mainly shoes, ores slag and ash, electrical and electronic equipment, glass and agricultural products mainly beans and fresh tomatoes.

The OSBPs on either sides of the border were commissioned in December 2020 by President Uhuru Kenyatta and Prime Minister Abiy Ahmed, projects that were funded by the African Development Bank(AfDB).

TMEA , which is the brain behind the OSBPs in the region, supported training for officials and installation of systems and computer hardware, enabling digitisation of the border operations.

Other infrastructure projects include a bitumen standard 438-kilometre road from Merille River to Moyale in Kenya and a 300-kilometre road in Ethiopia, whose construction was supported by AfDB, European Union, and the two governments in Nairobi and Addis Ababa.

Moyale is the only current gazetted, and main road link between Kenya and Ethiopia, and is expected to be a major route for trade under the Sh2.5 trillion Lamu Port-Southern Sudan-Ethiopia Transport Corridor (LAPSSET).

It becomes the fifth OSBP for Kenya with other operational ones being Busia, Malaba, Namanga and Taveta.