Business community lays hopes in the immigration pact signed between Rwanda and Tanzania to solve the longstanding issues constraining trade along key import and export corridors.
The local business people, particularly cite restrictions and fees that make it difficult to stay and work in Tanzania. It remains costly and nearly impossible for local firms and professionals to provide cross-border services.
Those in the logistics subsector, for instance, say much as Tanzania had made steps to streamline the business environment, more work is required from technocrats to facilitate mutual recognition of licensed transport operators and clearing agents.
On the occasion of Tanzanian President Samia Suluhu Hassan’ visit to Rwanda Monday, the two countries signed a wide range of co-operation deals, including a memorandum of understanding on immigration.
It was not immediately clear what the details of the deal were, but the heads of State alluded to improved port logistics in their speeches.
Despite pushing for many years, Rwanda freight forwarders and clearing firms were not allowed access to the Tanzanian systems and the port of Dar Es Salaam, which forced them to go through Tanzanian companies at a cost and expense of cargo safety. Tanzania also requires work permits for Rwandans staying or working in the country at a cost of $500. Despite calls to scrap the fees, Tanzanian authorities only reduced it from $2,000.
The work permit issue has been raised in vain. Fred Seka, president of Federation of East African Freight Forwarders Associations (FEAFFA) told Rwanda Today that members pay between $150 to $200 per declaration to Tanzanian companies, fees that they feel should be paid by Tanzanian companies with operations around the Port With the central corridor being the main import and export gateway for Rwanda accounting for over 60 percent of Rwandan cargo, the issues have been cited as constraining trade flow and heightening the cost of doing business.
Businesses say the existing trade barriers have been exacerbated by the pandemic which led to even more delays, causing containers bound for Kigali to overstay at the Dar Es Salaam port facilities thereby accruing charges and penalties.
While tariffs are an important source of government income, they are also a source of inefficiency and lobbying.
Bilateral agreements like the recently signed are one way to reduce these trade barriers if successfully implemented and enforced.
Given the pandemic has almost grounded the economy to a halt, more efforts are needed to ensure that the existing trade barriers are addressed to facilitate the private sector to recover. It is important that the government does more to address on-the-ground constraints that paralyze the daily operations of ordinary producers and traders.
This calls for regulatory reform and, equally important, for capacity building among the institutions that are charged with enforcing the regulations.