Busia open border reduces cost of doing business, leaves losers sulking

Busia town once had only dust and rickety passenger bicycles for identity.

Then transit trucks started to pile up as Uganda stabilised and trade with Kenya improved, averaging Sh50 billion a year. 

Clearing agents and restaurant owners were happy.

“We were doing well. Trucks taking goods to Uganda could give us good business. We did their paperwork as they relaxed, of course for a fee,” Innocent Masiga, the local chairman of an association of clearing agents said.

In Business for the last 20 years, Mr Masiga, like most his colleagues in this trade, rose from an unattached agent to occupy a rented office where clerks sat behind computers to punch away numbers, clearing the 894 vehicles (trucks, buses and private cars) that required to cross the border per day.

“It created jobs and these jobs supported families. Traders depended on us so we invested in our offices to ensure we operated non-stop.”

TAX COLLECTORS

But even as trade rose, Kenyan and Ugandan tax collectors were not happy. Mr Julius Musyoki, the Kenya Revenue Authority’s Commissioner for Customs and Border Control admits clearing processes were inefficient and traders too long to clear.

“We used to have duplication and traders took a lot of time to clear their goods. They were frustrated and discouraged to do any further business. In fact we were in violation of the WTO World Trade Organisation (WTO) policy on ease of trade,” he said at the Busia rorder on Friday.

On Saturday, Kenya’s President’s Uhuru Kenyatta and Yoweri Museveni of Uganda will officially open the Busia One Stop Border Post (OSBP), one of the steps the two countries say will reverse the negativities traders faced here.

Built at a cost of $12 million (Sh1.2 billion), the facility was put up from 2012 with funding from the UK Department of International Development (DFID) and the Global Affairs Canada, through the cross-border business advisory organisation Trade Mark East Africa (TMEA).

CROSSING EASED

Officials from both countries say the crossing has eased the pain of doing business since it started operations last July.
“When you save time clearing, it means you also save money and the cost of doing business goes down,” argued Mr Musyoki.

“Our resources here are not duplicated because we are sharing offices and facilities. That means even the cost of operating the border post is lower than before because we are running other supportive integrated systems as well.”

The OSBP’s idea is to ensure clearing clerks for both countries are stationed on one side, such that a trader sending goods to Uganda only visits one office and gets the stamp that authorises him to deliver the goods.

HIGHEST REVENUE
KRA says it recorded the highest revenue collection of Sh1.4 million in a month, for the first time here since the OSBP opened. The amount is still low but Mr Musyoki argues the whole idea is to free up processes since goods originating from either side are not taxed, according to the EAC protocol.

“This is one of the busiest entry points for our country. We are clearing at least 300 trucks (of goods) every day and we are collecting 90 per cent of all our entry revenues at Busia,” claimed Ian Rumanyika, the Public Affairs Manager at the Uganda Revenue Authority.

“We have witnesses a rise by 45 per cent in revenue collections since it opened and we are sending more foodstuff to Kenya. We hope this trend will continue as we improve most of the border points.”

Previously, one needed to queue on one side of the border, get cleared then line up again at the corresponding side to be allowed to carry on. Now, the TMEA says clearing time for goods has reduced by up to 74 per cent, from the more than 14 hours of waiting to about three hours.

DOUBLE QUEUES
Travellers take an average of 37 minutes to clear, down from the double queues that consume at least an hour and 26 minutes.
“The procedure is easier, I think it has helped those of us who trade in perishable goods to ensure we reach the market in time,” Lillian Matanda, a Ugandan dealer in bananas said.

“Perhaps they will need to educate more people to understand that the process is now easier. I can’t complain for now.”

There are other benefits, admitted Radian Juma, a clearing and forwarding agent.

“We have seen improved security and infrastructure is more modern, in addition to faster clearing time. Perhaps the only thing they need to improve on is the system network which I think may have been overloaded with the merger of systems,” he told Nation.co.ke.

The OSBP also combines various agencies involved in clearing goods. The revenue authorities, immigration, plant health inspectorates and security are housed in the same building.

EARLY RETIREMENT
But if beneficiaries are celebrating, losers are sulking, even demanding that governments revert to the old system. The ‘problem’ started earlier than the OSBP, according to some clearing agents we talked to.

Two years ago, the Kenya Revenue Authority and the Uganda Revenue Authority reached an agreement to share information. Through a system called the Revenue Authorities Digital Data Exchange (RADDEX), the two authorities’ systems are electronically linked to allow clearing agents to file in information as opposed to moving from office to office.

That reduced clearing time from six days to six hours. But there was a problem: While it allowed for faster declaration of goods at the first point of entry; it ate the lunch of clearing and forwarding agents.

“Our work is going. We are not happy,” said Mr Masiga.

“We no longer have anything to do because goods are cleared at the point they first entered,” lamented Ugandan clearing agent Ashat Nabukwa.
“We are seeing ourselves retiring early.”

JOBS LOST
Mr David Barasa, a former local chairman for the Kenya Freight and Warehousing Association said that firms were closing down.

“Busia Border is going to die naturally (sic). The work we used to do here has been taken over by the Ugandans and Rwandans.

“We need to review that law on customs declaration so that agents in Kenya have work to do instead of being flower girls.”

The exact number of jobs lost due to this is not yet documented, but Kenya Revenue Authority officials argue the disruption caused by the changes was necessary.

“Efficiency is what we need, and efficiency has both advantages and disadvantages. But an efficient process will actually attract more businesses because we know some traders were discouraged by the processes,” Mr Musyoki added.

13 BORDER POSTS

The Busia crossing point is among the 13 border posts in Kenya, Rwanda, Uganda, Burundi and Tanzania that have been converted from 'two-stop' border posts into single premises entity or OSBPs to facilitate movement of people and goods across the East African Community.

The other OSBPs are Namanga, Taveta/Holili, Lunga Lunga/Hororo and Isebania/Sirari on the Kenya-Tanzania border, Malaba on the Kenya-Uganda border as well as Moyale on the Ethiopia-Kenya border.

Others are Mutukula, Rusumo, Nemba-Gasenyi, Ruhwa, Mirama Hills/Kagitumba and Kobero-Kabanga.