Corruption, red tape add 39% to logistics costs

Logistics costs in East Africa could be reduced by at least 30% by reducing red tape and tackling corruption, according to a study undertaken for the London-based Overseas Development Institute. Authors Andreas Eberhard-Ruiz and Linda Calabrese found that trucking services on the main trade artery running from the port of Mombasa to the Ugandan capital of Kampala “are already provided on a competitive basis, and increased trade facilitation would lead to even lower transport prices. “In total, transport prices could fall by as much as 30% from their current levels through trade facilitation measures that

reduce transit time and costs to a minimum,” they found. Their research, which included interviews with truck drivers and operators, found that delays at the border posts as a result of red tape had a greater impact on total costs than bribery and corruption on the route. They estimate that bribes paid to traffic and border officials add 1.5% to the overall transport costs on the route. “Addressing the trade facilitation barriers responsible for delays would reap higher benefits.

For instance, a 7% reduction in cargo transport prices could be achieved by speeding up clearance of cargo at the border,” state the authors of the research. This is despite the establishment in 2005 of the East African Community (EAC), which is supposed to speed up trade between Burundi, Kenya, Rwanda, Tanzania and Uganda. “Although trade facilitation efforts have been particularly successful at the customs clearance stage, the reduction in cargo transit

times between Mombasa and Kampala have been less impressive. “Over the past three years, clearance times of imports with Kampala as their final destination have declined strongly both at the port of Mombasa and at the inland container depot in Kampala, while route transit times have remained stagnant at around five to six days,” the authors found in a follow-up study. A combination of inadequate infrastructure, congestion and border delays reduced the average trucking speed to between eight and 10 km an hour. It took 230 hours to carry transit cargo the 1 140-odd kilometres from Mombasa to Kampala. Drivers interviewed estimated that around 34% of the time was spent waiting at the border,

queuing at weighbridges, roadblocks and other This cost is quantified in a US$249 allowance drivers were given for the MombasaKampala trip at the time of the study. Of this, truck drivers said around 34% was typically used for personal expenses such as food and accommodation, 20% to cover road usage charges in Uganda, 13% to pay for bribes and other delays, and 9% for security expenses and parking fees. The remaining 23% is used as a buffer for unforeseen circumstances and minor en-route repairs to the truck. Research estimates that bribes paid to traffic and border officials add 1.5% to the overall transport costs.