Covid restrictions fuelling illicit trade in the region – EABC

Traders are resorting to illegal routes to move cross the borders.

In Summary

•This is on lack of a harmonised approach in handling Covid-19 measures, including charges for tests which vary by country.

•Border delays also continue to affect movement of trucks with turn-around time remaining high.

EABC CEO Peter Mathuki speaks during a media forum in Nairobi, on January 21/COURTESY
EABC CEO Peter Mathuki speaks during a media forum in Nairobi, on January 21/COURTESY

Lack of harmonised systems at the borders is fuelling illicit trade in the region, the East African Business Council (EABC) has warned.

While cross border trade among the East African Community (EAC) member states has high potential, the different approaches in handling Covid-19 tests, clearance of goods and movement of persons is proving to be a barrier.

This is affecting intra-EAC trade which is at a low of 13 per cent, compared to common markets such as the EU which is at 67 per cent.

Traders and truck drivers are parting with $100 (Sh10,980) to get tested at Tanzania and Burundi borders, between $30-$50 (Sh3, 294-Sh 5, 490) in Uganda, up to $60 (Sh6,588) for Rwanda, while in Kenya, the charges vary and can go up to Sh10,000.

Small traders who buy and sale merchandise across the borders, mainly markets and busy bordering towns, are also facing a hard time getting clearance.

A huge number of traders are using panya routes ( illegal routes) to move goods across borders
EABC CEO Peter Mathuki

This, EABC says this has pushed a number of them to seek alternative routes with the porous borders giving room for illicit trade, dealing a major blow to revenue bodies in the region.

“A huge number of traders are using panya routes ( illegal routes) to move goods across borders,” EABC CEO Peter Mathuki said yesterday, during an editors forum in Nairobi.

Other cross-border challenges in the wake of Covid-19 includes delays in getting Covid-19 test results for truck drivers, non-implementation of the EAC agreed Covid-19 Standard Operating Procedure for truck drivers and inadequate laboratory facilities to test aflatoxin in cereals.

Truckers are also subjected to manual cargo scanning and this coupled with intermittent cargo scanner breakdowns causing slow turn-around time in cargo clearance.

There is also insufficient parking space on trunk routes along the Northern transport corridor(which runs from Mombasa to the hinterland) and punitive fines for truck drivers by way of implementing the EAC Vehicle Load Control Act, due to variations in axle measurement systems at different weigh bridges.

Pre-Covid, truck turn-around time between Mombasa and Kampala was averaging seven days, which has now gone up to an average 14-20 days as a result of border delays.

EABC chairman Nick Nesbitt emphasised the need for the EAC secretariat to fast-track a regional harmonised approach “to promptly facilitate interventions at EAC border points, to unclog trade blockages and facilitate faster clearance of goods.”

Some of the common goods moved across-borders by small trades include alcoholic drinks, household goods, clothing, food stuff and fast moving retail goods mainly for small retail businesses.

During the 48th Biannual Assembly of East African Revenue Authority Commissioners Generals (EARACGs) meeting, last Novermber, it was reported that revenue growth in the region ranged from -44.9 per cent to 2.1 per cent in the wake of Covid.

During the meeting chaired by Kenya's KRA Commissioner-General James Mburu, the tax bosses committed to the EAC integration and curbing of revenue leaks.

Meanwhile, the EAC economy is projected to rebound in 2021, but will largely depend on partner states commitment to macro-economic policy coordination and adoption of a regional coordinated approach in handling the pandemic.

Covid-19 disruptions in 2020 provided a learning curve, on the need to have sustainable EAC regional value chains integration for the development of finished products with a view of reducing industrial and trade risks arising out of external shocks,” Nesbitt, who is also the Kenya Private Sector Alliance chairman, said.

According to the AfDB 'East Africa Economic Outlook 2020', the East Africa region is projected to recover to 3.7 per cent in the baseline scenario and 2.8 per cent in the worst-case scenario under the assumption that Covid-19 would be contained in the short-to-medium term.