Contradictory tax regimes, unpredictable road user fees and logistical nightmares remain major obstacles to cross-border trade between landlocked Uganda and the rest of the EAC.

 

Ugandan traders were lamenting at the East African Business Council-Private Sector Foundation Uganda (PSFU) roundtable with the East African Community (EAC) Secretary General.

The EABC, the regional private sector lobby, is conducting a series of meetings in the region to gather on-the-ground views on the business environment. It has meet with traders in Kenya and Rwanda.

Ugandan traders also revealed that the cost of the non-tariff barriers (NTBs) is very high, costing the region about $16 million every year.

The increasing NTBs have a total impact of $94 million on Uganda since they slow trade by as much as 60 percent of the expected volumes.

Uganda’s central beef is that its immediate neighbours, including Kenya, Tanzania, Rwanda and South Sudan, have unpredictable road fees that they cannot factor in their budgets.“Despite our progress, the private sector faces challenges in conducting business across the EAC. These include, primarily, our non-tariff barriers,” said Humprey Nzeyi, chairman of the private sector lobby PSFU, at the meeting in Kampala last week.

“Regulatory differences, this is mostly in terms of different tax regimes, have impacted most of our traders across the region, as well as transporters.”He noted that a recent EAC Regional Meeting Committee report stated that the removal of NTBs and other factors “would help increase the level of inter-regional trade in East Africa to at least 40 percent of all the trade over the next five years.”Last year, the EAC partner States remained net importers of commodities such as petroleum products, industrial machinery, textiles, crude palm oil, motor vehicles, cereals, rice, transport equipment, fertilisers, chemicals and raw materials for industrial production.

As a landlocked country, Uganda must access the sea through the ports of Mombasa and Dar es Salaam. However, these two gateways have proven to be a logistical nightmare for Uganda.“Infrastructure bottlenecks remain a significant obstacle to cross-border trade. On average, it takes three to five days to move goods from the port of Mombasa to Kampala, and four to six days from the port of Dar es Salaam,” he explained.“According to a recent study by the PSFU on the cost centres affecting the manufacturing sector, it was noted that logistical costs contributed 40 percent of the cost of doing business in Uganda,” said Mr Nzeyi.“With the extension of the standard gauge railway (SGR) from Naivasha to Kampala, these costs could be significantly reduce,” he added.

Currently, the line runs from Mombasa to Naivasha.

He noted that the private sector stands ready to partner with the EAC Secretariat to address the challenges, advocate for reforms and support initiatives that enhance the ease of doing business across borders.

George Odongo, a Ugandan member of the East African Legislative Assembly, cited the upcoming African Cup of Nations (Afcon), to be hosted in East Africa, as an opportunity for the region to boost tourism by liberalising airspace.

In response, the EAC Secretary General Veronica Nduva told the forum that it was the responsibility of partner States to eliminate bottlenecks to trade.“You know States have set an ambitious but achievable target to increase intra-EAC trade from the current 15 percent to 40 percent by 2030. So, we have a lot of work to do,” said Ms Nduva.“We must acknowledge that this requires clear commitments to implement the single customs territory, enhance our digital systems, and finalise infrastructure projects within the next two to three years.”Since the coming into force in 2005, the Customs Union is yet to be fully implemented.

The SG said a new blueprint for the implementation of the Customs Union is being developed and will be approved by the Central Council on Trade, Industry, Finance and Investment at its next meeting this month.“The private sector, therefore, is important to these interventions and you have a very clear view of the many barriers and I call each one of you to leverage your proximity to decision makers and advocate for the removal of these barriers, including the political barrier we've just had,” said Ms Nduva.“We hope this momentum will create the necessary leap forward such as what we witnessed when the Single Customs Territory was launched in 2015.”In August 2024, Uganda had a trade deficit of $133 million with the EAC partner States.

However, Uganda's total exports to the EAC increased to $2.2 billion in 2023 from $1.9 billion in 2022.

Imports from the EAC also increased to $2.23 billion in 2023 from $1.07 billion the previous year.

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