Reducing Transit Time And Cost

Shemmy SimuyembaSenior Transit Advisor

Transit challenges

Congestion at Weighbridges. 13 weighbridges on Mombasa-Busia road

Congestion at Border posts. Some 22,812 days are lost at weighbridges every year

Congestion at Port: The container terminal yard is holding close to 17000 Twenty Foot Equivalent Units (TEUs) against a capacity of 14300.

On average Transporters encounter 6 and 5 road blocks for every 100 km on the Northern Corridor

Competitive Advantage

The Regions Competitiveness Depends on Reliable, Efficient Supply Chain Execution

Competitive Advantage

High Value Goods

Reduce Time to Delivery

Regional Supply, Regional DemandReduce

Transportation Costs

Increase Supply Reliability

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$84 million program over the next 4 years Covers 16 countries covering East and Central Africa Focuses on targeted value chains (e.g. Specialty Coffee, Cotton-Textiles-Apparel,

and Staple Foods). Targets Northern and Central Transit Corridors and key Transit Spurs 4 Main Focus Areas

COMPONENT 1: Reduced Barriers to TradeCOMPONENT 2: Value Chain DevelopmentCOMPONENT 3: The East and Central Africa (ECA) Trade Hub (AGOA)COMPONENT 4: Global Food Security Response (Increasing Availability and

Trade of Staple Foods)

COMPETE FAQS

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Border Post

Port

Kenya

UgandaTransport

Northern CorridorOSBP

CustomsSPS Standards

TariffsIT Systems

Bonds

Transit and Trade Polices/Instrumen

tsRoad Safety

Anti-corruptionPPPs

Infrastructure

Terminal MarketTrading/Export

Distribution

Transport

Increasing Transit and Trade Efficiency Combined with….

Technical Assistance

Port EfficiencyCustoms

BondsInspectionsPaper work

Technical Assistance

to RECs /Regional

Authorities on

Technical Assistance to RevenueAuthorities/

Customs/Ministries on

FOCUS

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GOAL: COMPETITIVENESS

Improved Transit and Logistics

Reduced Cost of Doing Business

Increased Efficiency and Business Growth

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COMPETITIVENESS CYCLE

Global

Intra-RegionalIn-Country

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• The policy work in COMPETE will be based on the following policy platforms– EAC Customs Union and Common Market– COMESA FTA and the Proposed COMESA Customs

Union– COMESA/EAC/SADC Tripartite Process for

harmonization of trade regimes across the three regional blocks

– Bi-Regional and Multilateral Trade Agreements focusing on DFQF market access

FOUNDATION OF POLICY WORK

SUPPLIER TRANSPORTER CONSOLIDATOR

CARRIER

START

MOMBASA PORTTRANSPORTER

WAREHOUSE

IMPORTER

TRANSPORTER

BORDER

TOTAL TRANSIT PROCESSES APPROACH

TRANSSHIPMENT PORT

PORT OF ORIGIN

Freight ForwardingPolice Check

Plant Inspectorate Standards Bureau

Customs Weigh Bridge

Health Authorities 10 Cost Add in US$

KEY TO SYMBOLS

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IMPACT OF POOR TRANSIT/LOGISTICS

FIRMS COUNTRIES

High cost of doing business – Tied up capital which could be freed for business expansion

High input costs – High production costs and long lead times

High export costs – Lower profitability

High inventory stocks – Tied up capital, space, staff

High cost of bonds – Tied up capital

Governance issues – Rent seeking

Low competitiveness – Loss of or limited market share

Limited business growth – Lost opportunities for employment creation, economic growth and increased tax income and development

Inefficient resource use – High opportunity cost to economy/waste

Poor linkages – Inability to move food from deficit to surplus areas

Food insecurity – High risk of political instability and dissent

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COST OF TRANSPORT

COUNTRY TRANSPORT COSTS AS A SHARE OF VALUE OF EXPORTS (%)

Zambia 17

Zimbabwe 16

Malawi 56

Rwanda 48

LDCs 17

Developing countries 9

WTO estimates transport cost most SSA countries 5 times more than duties paid

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REQUIRED TIME FOR EXPORT

REGION MEAN MINIMUM MAXIMUM

COMESA 50 16 69

EAC 44 30 58

ECOWAS 42 21 71

SADC 36 16 60

AFRICA 48 16 116

EU 13 5 29

NAFTA 13 9 18

ASEAN 23 6 43

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VALUE CHAIN APPROACH

o Textiles & Apparel

o Coffee

o Cereals

o Horticulture

o Transit & Logistics

TRANSIT TRANSPORT POLICY PLATFORMS

PRIVATE SECTOR ADVOCACY AND

SERVICE DELIVERY

HARD INFRASTRUCTURE IMPROVEMENTS

SOFT INFRASTRUCTURE IMPROVEMENTS

ICT AND TECHNOLOGY SOLUTIONS

COLLABORATIVE APPROACHES

BEST PRACTICES AND BENCHMARKING

COMPETES - SEVEN PILLARS

PRIVATE SECTOR ADVOCACY AND SERVICE DELIVERY

• Truckers• Clearing and Forwarding Agents• Logistics Companies• Manufacturers • Shippers (Importers/Exporters)

CONSTITUENCY

CONSTITUENCY

• Port Authorities• Roads Boards• Railway Companies• Trucking Companies• Ministries of Works/Transport• Border Authorities• Private Sector Transit Operators

ELEMENTS

• Infrastructure investments in ports, railways, roads, trucking, repair workshops, weigh-stations and equipment, border posts; bridges, etc

• Identification and prioritization of investment options and opportunities

ILLUSTRATIVE ACTIVITIES

• Leveraging financing from among others, AfDB; MCC; USTDA; DBSA; USAID’s Infrastructure Fund; NEPAD; and others

• US privet sector/investors• Roundtables and Investment Forums• Innovative Public-Private partnerships (PPPs)• Risk mitigation to attract infrastructure financing from overseas investors

HARD INFRASTRUCTURE

SOFT INFRASTRUCTURE

CONSTITUENCY

Customs Authorities

Ministries of Finance

Ministries of Trade

Ministries of Transport/Works/Communications

Specialized Agencies – Plant and Animal Health; Standards; Security

Logistics Companies

ELEMENTS

Integrated Border Management (IBM)

Customs Automation

Transit Corridor Management Groups

Harmonized and Simplified Documentation and Procedures

Training of Officials and Private Sector in new systems and processes

Improved Logistics systems

ILLUSTRATIVE ACTIVITIES

One-Stop Border Posts (OSBP)

RADDex and ASYCUDA Interface

Regional Customs Transit Guarantee (RCTG)

Simplified Customs/Transit Documentation and Procedures

Support for Roll-out of COMESA Transit Facilitation Instruments (TFIs)

Private Sector Led Logistics Solutions

RCTG•Meeting Council of Sureties •Meeting with Banks•Meeting with Revenue authorities•Meetings with Freight Forwarders•Meetings with National Reinsurance•Visit Nimule border post (Sudan Spur)

ONE-STOP BORDER POST•Literature Review on infrastructure developments of OSBP

•Namanga Visit•OSBP Chirundu Visit• Introduce Integrated Border Management (IBM) at selected borders

RADDEX•Engage RECs on establishment of regional RADDEX Hub

•Resolve customs use of HS codes across EAC Region•SOW on formation of Joint committee with COMESA on future developments of RADDex and WB-TDTM Interface

• Joint IT Technical Working Teams (COMPETE/COMESA)

COMESA TFIs•Engage COMESA/EAC and agree on TFIs COMPETE will support accelerated implementation

•Define value added approaches with stakeholder involvement

•Support implementation of TFIs on specific Corridors/Borders

STRENGTHENING OF RITA's•Determine capacity building interventions• Identify priority partners• Identify Partnership Fund requirements•Support development of Strategic Plans & Business Plans

•Support implementation of Business Plans•Support development of harmonized industry/service standards across region

COLLABORATION WITH THE EAC & COMESA SECRETARIATS •COMPETE/ EAC Joint work planning meeting•COMPETE/COMESA Joint work planning meeting

•EABC Northern Corridor Trade Logistics Ministerial Conference; Towards Reduction of the Cost of Doing Business

•Central Corridor Stakeholder Conference

TRANSIT VALUE CHAIN STUDY•SOW defined•Contractor Selected and Appointed•Key private sector transit players to be involved

CORRIDOR DIAGNOSTIC STUDY• Input provided into finalization of SOW• COMPETE to provide on-going technical

support to Contractor• Participate in TCG to foster coordinated

approaches with other donors/players on Transit Corridors

INFRASTRUCTURE• Identify investment opportunities for private sector financing or PPPs

•Explore and support implementation of standardized road signage along Central and Northern Corridor s

• Investigate potential for inland waterways transport on Lakes Victoria and Tanganyika (Procurement of ferry vessels)

ONGOING ACTIVITIES

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THANK YOU