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According to donor organisation, Trade Mark East Africa (TMEA), ports in Kenya and Tanzania will be beyond capacity within the next six years as trade flow grows eight-fold in the northern corridor and four-times in the central corridor.
“There is a need to improve port efficiency at both Dar es Salaam and Mombasa. In addition, the rail system in the region needs to be upgraded,” said TMEA CEO Frank Matsaert.
Six per cent of East Africa’s trade volumes moves on rail, a number that is significantly lower than it was 10 years ago.
Inefficiencies in the system are causing investors to shy away from rail transport system.
The organisation, who’s aim is to promote economic integration in the region, noted that transport costs that are “amongst the highest in the world” also discouraged intra-regional trade.
A study done by the Rwandan private sector business association found out that the cost of moving a container from Mombasa to Kigali was three times the price of shipping the same container from the US to Mombasa.
Transit costs are further increased by delays at border crossings and non-tariff barriers between some of the countries.
The CEO noted efforts to improve transport with massive expansion project going on at the Mombasa port and the rehabilitation of the Rift Valley Railway.
Mr Martsaert was speaking on Friday as TMEA signed an agreement with Denmark for a grant of Sh2 billion to support cross-border infrastructure projects, improvements in border-crossing efficiency and the removal of non-tariff barriers.
Danish ambassador to Kenya, Mr Geert Anderson said that hastened integration was bound to attract more investors to the region.
“Danish investors are already talking about the potential of the East African market. The question is how quickly it will become a reality,” he said.
TMEA hopes to reduce transport costs by 15 per cent by 2015 and cut cross border transit time by 30 per cent in the same period.
PARASTATAL heads who signed the Mombasa port community charter risk being sacked if their agencies do not deliver on the contents of the new entity. The charter signed between the government and the private sector aims at improving the movement of cargo from the port into hinterland