Thursday, November 17, 2011

Kenya’s window on the world banks on thriving business

Lemons from Uganda are brought into Kenya at the Busia border point. Officials say it is difficult to quantify the value of trade because of smuggling. Photo/ISAAC WALE

Lemons from Uganda are brought into Kenya at the Busia border point. Officials say it is difficult to quantify the value of trade because of smuggling. Photo/ISAAC WALE 

By DANIEL OTIENO

Busia is Kenya’s window on the world, through the East African community and markets in the Great Lakes.

Apart from Tanzania, passengers and goods seeking entry to Uganda, Rwanda, Burundi, the Democratic Republic of Congo and even South Sudan rely either on the Busia or Malaba crossings.

A third border point was recently created by President Kibaki at Mulwanda, in Funyula but it is yet to become operational.

Plans are underway for the East African Common Market Protocol, which is supposed to lead to the free movement of labour, capital, goods and services within the EAC.

Strategic location

More than 1,000 vehicles laden with goods valued at millions of dollars pass through the county every day, but their impact is yet to be seen.

According to Mr David Erelu, chairman of the Cross Border Traders Association, each day an average of 700 trucks cross to Uganda through Malaba while Busia Town takes about 300.

“But in spite of the heavy traffic, Mr Erelu said locals were yet to tap the benefits of their strategic location.

“The county has recently seen an influx of people with more money to spend on business but they invest elsewhere. The locals do not have the capital to inject so they lose out,” Mr Erelu explained.

Shanties that used to dot the border towns are fast giving way to high-rise buildings. Several banks have established branches, a move seen to be targeting traders initially thought unbankable.

Amagoro District Officer Lois Rono said that in spite of the reduction in levies on goods from either side of the border, smuggling still thrived.

Mr Rono said it was difficult to quantify the volume of cross border trade because some of the goods were smuggled through porous routes.

“In some cases you may see a bicycle operator crossing with goods from either side of the border but in real sense he may be one of the many people feeding into a big truck. So large scale traders usually camouflage as small scale traders,” Mr Rono said.

Smuggling has been part and parcel of the Kenya-Uganda trade from time immemorial. It has become a profession by itself, with smugglers recognised informally by the police.

Mrs Jane Wambui has been buying textiles from Uganda for over a decade. She said some of the middlemen worked in cahoots with corrupt police officers who let them pass for a fee.

But the locals point out that the high point of the illegal trade came during the regime of President Idi Amin.

The world market had been facing a coffee shortage yet although Uganda had coffee in abundance it lacked the structures to sell it to the world market.

Kenyan traders saw the opportunity to smuggle harvested beans from Uganda into Kenya for export to Europe and elsewhere.

The trade was said to have changed the fortunes of many people who in return invested in the border towns.

Councillor Charles Onyango of Funyula County Council said one of the issues that would lock Busia out of the liberalised East African market was the fact that it had no factory or plant to add value to the goods.

“Busia is just a transit point like any other town on the highway. We need to reach out to investors by selling our strategic location as a gateway to the Great Lakes. Then we can get jobs and the revenue that goes with setting up industries,” he said.

He expressed the fear that although other members of the trade bloc were willing to do business freely, Uganda and Tanzania still had reservations about dealing with Kenya.

“On paper there should be preferential treatment for our citizens but once they cross the border, they are subjected to some non-tariff impediments that affect the overall trading environment”, said Mr Onyango.

Among those already benefitting from cross border trade were farmers in the Bunyala irrigation scheme who are selling rice directly to the Kibimba mill in Uganda.

Mr Joel Tanui, the National Irrigation Board manager in charge of Bunyala said opening the trade area will allow supply and demand to benefit the farmers.

“The beauty of the free trade areas for the farmers here is that they will usually sell to the buyer offering the best price and so they are encouraged to farm more because of the wider market, Mr Tanui said.

During the maize shortage earlier this year, he added, people living across the border got a reprieve from their Ugandan neighbours who had enjoyed a good harvest the previous season.

Relatives on both sides

Trade between Kenya and Uganda has a long history, partly because families had relatives on both sides of the border, said trade unionist and first Funyula MP Arthur Ochwada.

“We have the Basamia and Tesos on either side of the border, which encouraged people to trade freely because there was a feeling that the national boundaries were just imposed by the colonialist,” he explained.

He gave as an example the Awori family who had one of their sons, Aggrey, as an MP and Presidential contender in Uganda, while another, Moody, was Vice President in Kenya.