East Africa abundant opportunities

This year in May, a very interesting thing happened in East Africa. Kenya welcomed the National Electronic Single Window System, which will serve as a single entry point for parties involved in trade and transport to the region. “Today marks a milestone in Kenya’s history as we join the select league of Nations that have put in place an Electronic Single Window System to facilitate faster and efficient trade facilitation and improve business environment,” said President Uhuru Kenyatta. With this move, one will be able to lodge documents electronically for processing and approval; and make payments electronically for fees, levies, duties and taxes due to the Government on goods imported or exported. The biggest advantage this system will bring in, is by boosting the economy and increase prosperity in Kenya by making trade systems simpler, faster and more cost-effective. The Single Window Project will streamline the business processes and eradicate bottlenecks associated manual documentation of international trade transactions. The specific objective is to reduce cargo dwell time at the Port of Mombasa to a maximum of three days and a maximum of one day at the Jomo Kenyatta International Airport within a period of 2 years after operationalisation. At the border posts, the Electronic Single Window System is expected to reduce the cargo dwell time for both transits and intra-regional trade consignments to a maximum of one hour. Kenya’s neighbours in east Africa like Rwanda are already implementing a Single Window System while similar efforts are underway in Tanzania and Uganda. “Our ultimate vision should be to implement anEast African Community (EAC) Regional Single Window platform, which will integrate the National Single Window Systems in EAC Partner States. This will provide an efficient platform for data exchange among the respective Government Agencies within the Partner States for cargo being cleared through any of the ports within the EAC Region,” added Kenyatta.
Astral Aviation, a Kenya based all cargo carrier is upbeat about the new system. “This will result in an increase in trade within the East African region and will strengthen the hub of Kenya as being the gateway for the region,” says CEO Sanjeev Gadhia. He further adds, “This is a significant benefit to the air cargo community in Kenya as it reduces the transit time at the airport from three days to one day for air-air and air-road shipments.”
The revival of the EAC in 2000 was the turning point not only in terms of igniting the expansion of the transport and logistics sector but also in propelling regional push for economic growth. A key topic of discussion among global leaders at the 24th World Economic Forum on Africa was the need for free movement of talent and goods across Africa, in order to significantly strengthen businesses and boost intra-Africa trade on the continent. Charles Brewer, MD of DHL Express Sub-Saharan Africa at the forum, echoed this sentiment. “There was a collective consensus among African leaders on the topic of mobility in Africa, as well as the importance of efficient border and visa policies. We have seen good follow-up particularly in East Africa and it is imperative to continue to work on the border and customs environment to grow intra-Africa trade.” Said Brewer. Recognising the importance of travel facilitation and talent mobility as drivers to integrate and develop the region, President Paul Kagame of Rwanda, President Uhuru Kenyatta of Kenya and Prime Minister Moussa Mara of Mali have all signed The Call to Action on Travel Facilitation & Talent Mobility, which urges all African States to work together towards the establishment of joint policies and the removal of barriers to facilitate movement of people. Brewer also added that it was also positive to witness how small and medium enterprises (SMEs) are increasingly being recognized as the primary driver of economic growth in Africa and how they are being supported across Africa. “A growing SME base will create thousands of new jobs, which is an absolute must for this ever-growing continent, as it is a critical driver of sustainable economic growth.”
On the air cargo front, the East Africa region is of prime importance to European carriers, especially for Brussels Airlines Cargo. The carrier, besides minor adjustments in its African network, increased frequency to Nairobi, proving how important East Africa is to its business. “During 2013, we carried 13.723 tonnes cargo and mail to Africa and 13.352 tonnes from Africa. We aim to do the same during 2014 as we have not much more room for improvement since we have 90%+ cargo load factors on the African network,” says Herman Hoornaert, head of cargo, Brussels Airlines.
In March, Lufthansa Cargo’s Boeing 777F landed in Kenya for the first time. The aircraft reached its destination Nairobi following a flight from Frankfurt via Johannesburg. The freighter was loaded with more than 85 tonnes of cargo mainly fresh flowers, vegetables and fish from Kenya and Automotive and Oil & Gas equipment from South Africa for the European market. But the carrier views Africa as a very heterogeneous market for Africa. South Africa with a lot of typical industry demand has complete different patters than Kenya with its flower and perishable business whereas some Oil and gas destinations such as Luana and Malabo are characterized by stable demands. “The demand on routes between Europe and Africa has improved in the last couple of weeks. After a strong business around Valentine’s Day we hope for further stabilization after a difficult year 2013,” said Michael Goentgens, head of PR and communications for Lufthansa Cargo. The demand for air cargo is slated to pick up later in the year. But that can be only handled with sufficient investment to facilitate trade and ease of doing business, which the EAC is already focusing on.
According to the World Bank Doing Business Report 2012, the region that has a population of 135 million and a gross domestic product of $84.7 billion is the most vibrant in terms of intra-regional trade compared to other African economic blocs like Southern Africa Development Cooperation (SADC), the Economic Community of West African States (ECOWAS) among others. In 2011, EAC intra-regional trade value rose by 23 per cent to stand at $4.5 billion. In 2004 the value of intra-regional trade was $2 billion and around $3.5 billion in 2009.
The increasing level of regional trade that has been brought about by the establishment of a common customs union, market protocol and in the near future monetary union coupled by the fact that East Africa is becoming a bedrock of foreign direct investments (FDIs) has forced government to direct resources into transport infrastructures development. Besides, an end to differences over economic model ideologies has led to the adoption of a free market economy. In effect, this has seen the liberalization of key sectors like telecoms, financial services, retail and agriculture.
More importantly, the discovery of vast minerals has seen FDIs inflow into the region expand from $4.5 billion in 2011 to $6.3 billion in 2012 according to the UNCTAD World Investment Report 2013. This was against a sharp decline of global FDIs flows that fell by 18 per cent to $1.35 trillion in 2012 from $1.65 trillion in 2011. “There is a positive growth for East Africa in 2014. The mining sector in Tanzania along with the discovery of gas has resulted in an increase of air and sea shipments into Tanzania,” says Gadhia. 