Malawi becomes the newest country to sign a host country agreement (HCA) with Trademark East Africa (TMEA) in what industry players see as a fundamental change in addressing the country’s high transport costs.
The country has one of the highest transport costs, which the Ministry of Transport estimates accounts for 56% of import and export costs. This is further made worse by complex and tedious regulatory systems that have increased the time taken to clear goods.
Exporters spend an average 131 hours on documentary compliance, and 85 hours on border compliance. In comparison, Kenyan Exporters take an average of 40 hours to comply with document and border-related requirements.
The TMEA’s Malawi Country Programme (MCP) will partner with the Malawi Government, the private sector, and civil society organisations to support trade and regional integration.
The UK Government, through the Foreign, Commonwealth and Development Office (FCDO), in May 2020, signed a memorandum of understanding with TMEA to fund MCP activities at an initial budget of £40 Million for six years. The programme is part of FCDO’s multi-stakeholder’s intervention known as Malawi Trade and Investment Programme (M-TIP).
“TMEA plans to support Malawi Government’s commitment to reduce barriers to trade by improving business competitiveness through improved infrastructure and supporting the private sector to access regional and international export markets,” TMEA said in a recent brief.
Unlocking selected key trade nodes promises to improve Malawi’s land linkages with its neighbours in the east and south, thus reducing costs of trade and subsequently consumer goods.
The TMEA programme mirrors the aspirations of the Malawi Growth Development Strategy III, the national overarching medium-term development instrument for the country, the brief states.
TMEA’s approach resonates with key policy instruments, including the National Export Strategy II, currently under review; and the National Transport Master Plan, which aims to develop transport infrastructure to enable the integration of land-linked Malawi into the regional and international markets.
TMEA will support operations of newly developed one stop border posts (OSBP’s) of Mchinji, the border point with Zambia; Mwanza and Dedza with Mozambique and Songwe with Tanzania. It will also support implementation of the National Export Strategy II, currently under development; harmonisation of standards and sanitary and phyto-sanitary regime; trade policy initiatives; removal of non-tariff barriers; and supporting cross border traders.
Intervention in Malawi has two components. The first component involves unlocking bottlenecks on the key trade corridors of Malawi by increasing border traffic and customs efficiency; efficiency of inland container depots at Lilongwe and Blantyre and the strengthening public-private dialogue mechanisms on Malawi’s key trade corridors.
The second component will involve unlocking bottlenecks for government and private sector identified priority value chains by developing standards regime, which has already begun in the Safe Trade Emergency Facility (STEF) Programme.
It will also include enhancing capacity of trade related systems through upgrading the customs management system, ASYCUDA World, to improve module efficiency.
Other programmes include compliance with WTO Trade Facilitation Agreement, currently being piloted by the Malawi Revenue Authority (MRA); automating trade processes to include innovative transportation solutions; develop logistics hubs and market access programmes.
For the first time, TMEA this year report presented highlights and results from ten and not the usual seven countries in which the agency operates. TMEA expanded its reach to Ethiopia, and Somaliland as well.
In Kenya, the partnership deepened at the Port of Mombasa, with Magongo and Kipevu Roads progressing to over 50% completion. TMEA also supported first, middle, and last mile supply chains, ensured private sector access to market information, and supported development of 15 digital portals for trade in Government agencies.
“These portals will simplify and reduce export and import transaction costs,” Frank Matsaert, the Chief Executive Officer, said in his forward to the latest report released this year.
Ongoing works at Moyale Border–between Kenya and Ethiopia – will link the East Africa to the Horn, with improvements on this corridor expected to open a market of over 160 million people.
In Somaliland, improvements on Berbera Corridor continued with the commencement of Hargeisa Bypass construction. TMEA “Good neighbor approach” supported programming in the Democratic Republic of Congo (DRC) where continuous engagement with national and provincial Governments paved way for extension of the Regional Electronic Cargo Tracking System (RECTS), and the construction of a One Stop Border Post (OSBP) at Goli (its border with Uganda).
“We believe that trade facilitation interventions such as improved customs, removal of non-tariff barriers, and training of private sector will help DRC lower its significantly high costs of trade with East African Community (EAC) neighbours,” Matsaert said.
