TRANSPORT AND TRADE FACILITATION ALONG THE NORTHERN CORRIDOR: Donat M. BAGULA Executive Secretary, Northern Corridor Transit and Transport Coordination Authority 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE “Towards improved trade facilitation and reducing the cost of doing business in the transport and logistics services industries” Nairobi, 17 th – 18 th Sept

Outline  Introduction  The Role of the Northern Corridor Transit &Transport Coordination Authority (NCTTCA)  Mechanism used by NCTTCA to discharge its responsibilities  Logistics costs along the Northern Corridor  Change in overall logistics costs  Policy and infrastructure initiatives to meet constraints  Initiatives by the NCTTCA to promote trade facilitation  Challenges along the Northern Corridor  Recommendations 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

What is the Northern Corridor?  The Northern Corridor is the surface transport system linking the great lake countries of Burundi, DRC, Kenya, Rwanda, South Sudan and Uganda to the sea port of Mombasa. The Northern Corridor also serves Northern Tanzania, Ethiopia and Somalia.  The Northern Corridor transport infrastructure comprises of Mombasa Port, road network, railway network, pipeline, inland water ways, border stations, weighbridges and transit parking yards. 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Which are the Northern Corridor transit routes? 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Where is the Northern Corridor? 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Which Legal framework for the Northern Corridor?  1985 the NCTTCA came into existence under the Northern Corridor Transit Agreement (NCTA).  2007 a new agreement, the Northern Corridor Transit and Transport Agreement (NCTTA) was signed.  NCTTCA is comprised of six member States (Burundi, DRC, Kenya, Rwanda, South Sudan and Uganda)  Governed by the NCTTA and its protocols.  Council of Ministers in Charge of transport; Executive Committee – Permanent Secretaries of the Ministries in Charge of transport; Specialized Technical Committees; Public Private Partnership Committee and the Secretariat located in Mombasa. 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

The Role of the Northern Corridor Transit &Transport Coordination Authority (NCTTCA)  To facilitate trade, the movement of persons, vehicles and goods in domestic, regional and international transport.  To stimulate economic and social development in the territories of the member States  To transform the Corridor into a Development Corridor which, in addition to offering safe, fast and competitive transport and transit services that secure regional trade, stimulates investment, encourage sustainable development and poverty reduction.  To implement strategies for accelerating economic and social growth along the Corridor while ensuring environmental sustainability. 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

The Role of the Northern Corridor Transit &Transport Coordination Authority (NCTTCA)  The NCTTCA plays an advocacy role among which it coordinates measures to:  Expedite the movement of freight along the Corridor  Minimize incidence of customs fraud  Simplify and harmonize documentation and procedures relating to movement of goods in transit  Improve transport infrastructures and facilities  Adopt ICT to improve exchange of information and to monitor movement of cargo along the Corridor 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Mechanism used by the NCTTCA to discharge its responsibilities:  Provides a forum for negotiations between the Public and Private Sector Stakeholders from all the member States.  Undertakes studies to inform the appropriate actions needed for improvement.  Provides data and information which Stakeholders in the Member States can use to make informed decisions.  Monitoring performance of transport operation along the corridor; Disseminates results 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Mechanism used by the NCTTCA to discharge its responsibilities:  Sensitizing Stakeholders in the Member States;  Supporting common/standard procedures and regulations development and implementation;  Supporting capacity building initiatives of key institutions engaged in transport operations; and  Networking with international, regional, and local partners affiliated with transport corridor management. 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

11 Logistics costs along the Northern Corridor Average Transport rates per Route (USD) No. of Round Trips/Month Route 2012 Nov. 2014Mar. 2015Nov Mar Mombasa- Nairobi 1,1181, Mombasa- Kampala 3,0702,8672,75144 Mombasa- Kigali 4,6504,8334,35023 Mombasa- Bujumbura 7,0006,3506,04012 Mombasa-Goma 6,5006,7505,05812 Mombasa-Juba 6,2504,6785,03022

a) A consistent reduction in total cost for all destinations is observed. b) The change much smaller for Kenya & Uganda than for longer trips. c) Significant decrease in transport costs from Mombasa to South Sudan. 12 Transport Rates per Route (cont’d).

Transit Time Along the Northern Corridor; has been decreasing 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

14 A Transportation Costs B Transit Overheads C Hidden Costs Primary transport charges: Rail, Road, Pipeline, Inland Waterway. + - Regulatory Agencies Compliance Costs: Visa, Road User Charge, Cost of Customs Seals/ECTS; - Forwarding Agency Fees; - Handling charges: Port charges, Shipping lines, CFS/ICD/Transit Sheds, verification /inspection related costs. + Direct Costs Associated with Delays: Storage charges, Container retention charges; etc. Indirect Costs Associated with delays: Loss in business opportunity due to delays and unreliability (Estimated based on opportunity costs of extra inventory). Key Elements of the structure of the transport logistics costs. Change in overall Logistics Costs (Direct + Indirect).

15 Change in Overall Logistics Costs (Direct + Indirect). Fig. 1: Mombasa to Nairobi a) For Kenya traffic, trucking cost has fallen by 21%, while hidden costs fell by 74%. b) The overall reduction is 56 % % change Trucking Cost 1,3001,023-21% Opportunity Cost for Truck % Extra Inventory for Cargo 2, % Subtotal - Hidden Costs 2, % Total: Trucking Cost + Hidden Cost 3,8161,681-56% Source: NCTTCA, Impact Assessment of the Northern Corridor Performance Improvement Activities, May 2015

16 Change in overall Logistics Cost (Cont’d). Fig. 2: Mombasa to Kampala a) The cost of key components for Mombasa-Kampala traffic has fallen by 16%, while hidden costs fell by 32%. b) The overall reduction in cost is 26 % % change Trucking Cost 3,4002,867-16% Opportunity Cost for Truck 1,7382,27631% Extra Inventory for Cargo 4,1421,726-58% Subtotal - Hidden Costs 5,8804,002-32% Total: Trucking Cost + Hidden Cost 9,2806,869-26% Source: NCTTCA, Impact Assessment of the Northern Corridor Performance Improvement Activities, May 2015

17 Change in overall Logistics Cost (Cont’d). Fig. 3: Mombasa to Kigali a) For Mombasa – Kigali, Direct costs have fallen by 26% while hidden costs have fallen by 31%. b) The total trucking and hidden cost have fallen by 28% % change Trucking Cost 6,5004,833-26% Opportunity Cost for Truck 2,1072,54221% Extra Inventory for Cargo 4,4051,973-55% Subtotal - Hidden Costs 6,5124,515-31% Total: Trucking Cost + Hidden Cost 13,0129,348-28% Source: NCTTCA, Impact Assessment of the Northern Corridor Performance Improvement Activities, May 2015

18 Change in Overall Logistics Cost (Cont’d). Fig. 4: Mombasa to Bujumbura a) For the traffic Mombasa – Bujumbura, Trucking costs have fallen by 21% while hidden costs have decreased by 25%. b) The overall reduction is 23 % % change Trucking Cost 8,0006,350-21% Opportunity Cost for Truck 1,8982,75045% Extra Inventory for Cargo 5,0792,466-51% Subtotal - Hidden Costs 6,9775,216-25% Total: Trucking Cost + Hidden Cost 14,97711,566-23% Source: NCTTCA, Impact Assessment of the Northern Corridor Performance Improvement Activities, May 2015

19 Change in overall Logistics Cost (Cont’d). Fig. 5: Mombasa to Goma a) For Mombasa-Goma traffic, the Trucking costs have decreased by 29% while hidden costs have fallen by 45%. b) The total reduction is estimated to 38 % % chang e Trucking Cost 9,5006,750-29% Opportunity Cost for Truck 1,6302,20335% Extra Inventory for Cargo 10,4864,507-57% Subtotal - Hidden Costs 12,1166,710-45% Total: Trucking Cost + Hidden Cost 21,61613, % Source: NCTTCA, Impact Assessment of the Northern Corridor Performance Improvement Activities, May 2015

20 Change in Overall Logistics Cost (Cont’d). Fig. 6: Mombasa to Juba a) For Mombasa – Juba, Trucking costs have fallen by 52%, or more than US$ 5,000. The reduction in hidden costs is 24%. b) The total reduction is estimated to 37 % % change Trucking Cost 9,8004,678-52% Opportunity Cost for Truck 2,5813,28527% Extra Inventory for Cargo 8,8775,425-39% Subtotal - Hidden Costs 11,4588,709-24% Total: Trucking Cost + Hidden Cost 21,25813,387-37% Source: NCTTCA, Impact Assessment of the Northern Corridor Performance Improvement Activities, May 2015

Policy and infrastructure initiatives to meet constraints  Dredging, construction of new berth (berth 19) and container terminal at Mombasa Port. The construction of Dongo-Kundu Road alternative for receipt and evacuation of cargo from Mombasa Port.  Construction of OSBP’s; Malaba, Busia, Kagitumba/Merama Hills, Nemba/Gasenyi, Katuna/Gatuna, Bugarama/Ruhwa, Rubavu/Goma,….  Use of High Speed Weigh In Motion Weighbridges; Kenya has installed HS-WIM weighbridges along the Northern Corridor; Uganda is using Low Speed Weigh In Motion Weighbridges. The EAC Member States currently have a common law on vehicle overload control, 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Policy and infrastructure initiatives to meet constraints  ICT Infrastructure; The National Broadband Strategy has been developed for Kenya, Rwanda and Uganda and is going on for South Sudan. Points of interconnection on the borders were agreed. Governments shall be the anchor tenants for the National Broadband Infrastructure (NBIs). Any interconnection agreements should be between governments as well as Private Sector.  Oil Pipeline; In September 2014, under the NCIP, through the Joint Coordinating Commission, Kenya, Uganda and Rwanda Governments launched an Invitation for Expression of Interest, for the procurement and construction of Eldoret-Kampala-Kigali refined petroleum products pipeline. This pipeline is one of the Northern Corridor Integration Projects that aims to accelerate regional development.  Construction of the Standard Gauge Railway (SGR) 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Map of the planned SGR along the Northern Corridor Transport and logistics innovation towards the review of the Almaty Program of Action in 2014 Geneva, October

Initiatives by Northern Corridor to promote trade facilitation  Development of the Transport Observatory and Dashboard. or  Conduct periodic Trade and Transport Logistics Surveys.  Development of PPP Guidelines and Handbook.  Development of Infrastructure Master Plan.  Development of Common Transport Policy Guidelines.  Undertake studies to guide decision making.  Development of framework for establishment of Road Side Stations and identification of areas for establishment of RSS along the Northern Corridor. 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Some of the Challenges  Poor information exchange; poor interconnectivity of systems used by stakeholders, poor network, system downtimes, inefficient information exchange. Operating manual alongside automated systems.  Inefficient National Electronic Cargo Tracking Systems (ECTS)  Delays at weighbridge stations and border stations.  Slow uptake and embracing of new trade facilitation initiatives by stakeholders.  Variation across the Northern Corridor Member States in the enforcement of common laws e.g. the EAC law on vehicle load limits.  Failure by the private sector to play their role towards the reduction in time and cost of transporting goods along the Northern Corridor. 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Recommendations  Establish and use a common platform for clearance of goods along the entire Northern Corridor.  Pre-clearance of goods at entry points and at the oil depots.  Fully adopt and use the COMESA Regional Customs Transit Guarantee (RCTG) to cover goods whose taxes are not paid at the first point of customs entry.  Establish a Regional Electronic Cargo Tracking System (R-ECTS). 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

Recommendations  Adopt the use of HS-WIM weighbridges at all weighbridge stations along the Northern Corridor. Member states to fully domesticate the provisions of the EAC vehicle load control bill.  Conduct periodic sensitization/training of stakeholders about new developments and extensive dissemination of trade facilitation information to stakeholders. 1 ST COMESA TRANSPORTERS AND LOGISTICS SERVICES INDUSTRIES REGIONAL DIALOGUE, Nairobi 17 th – 18 th Sept

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