A mixed approach facilitates cross border trade leading to increased revenue, incomes and improved livelihoods

Allen Twinomugisha, a mother of 7, trades at the Uganda/Rwanda Border at Mirama Hills. She crosses from Uganda to the Rwanda town of Kayonza to sell bananas and other agricultural produce at-least 4 times a day. She makes a profit of UGX10, 000 per day (US$61 per month).  Judging from the busy transporters on bicycles, motorcycles and matatus, the cross border business at the newly opened Ntungamo/Kagitumba One Stop Border Post (OSBP) is thriving. Allen journey has not always been easy. Various infrastructural and policy initiatives around the borders are expected to not only improve hers and other cross border traders operations but also to lead to a reduction in transit time at the border crossings. Adoption of key policy changes agreed at the regional level complemented by information campaigns targeting informal cross border traders will enable informal trade to streamline to formal trade, with cost savings to traders and improved revenue collection by governments. TradeMark East Africa (TMEA) is government of Uganda’s Trade Facilitation strategic partner and has invested over US$ 52 million in the construction and operationalisation of 5 One Stop Border Posts (OSBP).

Allen recalls her trade journey between Uganda and Rwanda a few months ago when she had to use informal routes, which were littered by a plethora of bribes and harassment. She did not understand formal route requirements, stayed away from the main border offices and opted the informal route thinking it was cheaper.  She highlights new benefits, which she attributes to the new OSBP and information and sensitization campaigns that came as a package of the new OSBP. The clearing process for her goods, which are usually less than $2,000, have been simplified. The border officials are friendlier, there is less congestion as the border has expanded its facilities and she only stops once upon entry to Rwanda.

Allen is part of a bigger picture, and policy makers in Uganda understand her statistical importance, and thus work with partners like TradeMark East Africa (TMEA) to empower her.  Bank of Uganda (BoU) reported that informal cross border traders around Uganda borders contributed around US$381 million for the year ending November 2015, averaging at US$32 million per month. BoU further states that informal cross border trade has had a positive knock-on effect in the country in terms of employment creation and increased income.

Reports by the African Development Bank (AfDB) indicate that supporting cross border traders has had positive macro-economic and social ramifications such as food security and income creation particularly for rural populations who would otherwise suffer from social exclusion. In an event in Kampala, Allen Asiimwe, the then Country Director, TradeMark East Africa (TMEA)-Uganda said that TradeMark East Africa (TMEA) will continue working with government agencies like Uganda Revenue Authority (URA) as well as the private sector to support projects that will, “contribute to reducing the time and costs of doing business in the country.” “We endeavour to continue our partnership with the government of Uganda in construction of infrastructure and adoption of ICT in order to enhance access to markets for all business people. Already, we have partnered with the government to construct and operationalise OSBPs at Busia, Mutukula, Mirama Hills and Elegu.” said Allen. Other interventions include supporting the simplification and adoption of processes and procedures under the EAC Rules of Origin (ROO) regime which provides for simpler processes for clearing of goods under US$2,000 and the application of the Common External Tariff (CET) where goods produced in the EAC attract zero tariff.

So, where does the rubber meet the road for Ugandans to reap benefit of government supported projects?  Assessments indicate that many cross border traders are not aware of the gains of the reforms and as a result, end up shying away from new facilities and continue using illegal routes to trade. This means loss of revenue to government as well as loss of income to the traders.

In response to this need, civil society organisations such as EASSI and UWEAL have partnered with the government and other donors to create awareness and educate cross border traders on the new procedures. They empower traders by supporting development and organisation of small trader cooperatives, teaching negotiation techniques, tax classification, advocate for removal of non-tariff barriers and small business management. Border officials are also trained to better manage and treat cross border traders. Forums where state agents and traders meet to voice and address grievances and tackle obstacles to trade are organised. Mrs Amelia Kyambadde, Uganda’s Minister of Trade Industry and Cooperatives underscores the importance of the mixed approach and projects a vibrant future saying that “support to informal cross border traders, especially women helps to alleviate poverty at the household level. That is why these initiatives are so important”.

The newly operational Mirama Hills OSBP and the opportunities it has provided to Allen is an indication of an even brighter future in cross border trade. Allen crosses from Mirama Hills in Uganda and sells her produce to shops in Kayonza Town in Rwanda making enough money to school four of her seven kids, with one of her daughters attending a boarding school.  When crossing the border, Allen stops once on the Rwandan side of the border to clear her produce which is covered under the rules of origin (RoO) and is therefore not taxable.