Boost for regional trade flow as DRC joins Comesa FTA
What you need to know:
DRC committed to phased tariff reduction scheme, starting with an instant tariff reduction of 40 per cent which would be followed by two equal cuts of 30 per cent.
The flow of goods on the Mombasa-Malaba corridor is set to ease further after the Democratic Republic of Congo (DRC) joined the Comesa free trade area (FTA), signalling intention to eliminate time-consuming customs procedures.
Comesa secretary-general Sindiso Ngwenya said the DRC was committed to a phased tariff reduction scheme, starting with an instant tariff reduction of 40 per cent which would be followed by two equal cuts of 30 per cent.
Kenyan traders rely on the Mombasa-Malaba road (Northern Corridor) to move produce to their key markets in the region.
Landlocked states such as Uganda, Rwanda, Burundi, DRC and South Sudan also rely on the highway to receive import orders via Mombasa Port.
Kenya has previously reduced administrative barriers on the Northern Corridor in part of efforts to speed up cargo flow to landlocked markets.
Under FTA, a designated group of countries agrees to eliminate tariffs, quotas and preferences on most (if not all) goods.
Kenya is among countries seeking to reap from the Comesa FTA model with the planned construction of a Special Economic Zone (SEZ) in Mombasa’s Dongo Kundu area.
The Kenyan Cabinet last week approved the development of the SEZ that will host wholesale and retail trading, breaking bulk, re-packaging logistics, warehousing and handling and storage of goods, among others.
The facility will be developed as an industrial and commercial hub with potential for the creation of jobs for the youth, a dispatch from State House said.
A blue print by the Industrialisation ministry showed that the plan included the establishment of a free trade zone (FTZ) within the 1,326 hectares SEZ facility.
“2018 is the target year for the launch of Mombasa SEZ at Dongo Kundu” the ministry said in the document adding that it forecasts a population of 27,000 workers within the SEZ.
The FTZ project will be established on a site of between 300-500 acres of land that is available to investors.
It will host wholesale and retail trading, breaking bulk, re-packaging logistics, warehousing and handling and storage of goods among others.
Unlike the current practice at Mombasa port where all goods are subjected to slow customs procedure, an FTZ creates a haven where goods on transit face less strict customs regulations. The area will be reserved for re-exports to the 400 million-people Comesa bloc, allowing for transhipment of cargo without inspection or paying customs duty.
Uganda and Ethiopia recently undertook to join the Comesa FTA to boost trade in the region. Ethiopia has of late found itself at loggerheads with other partner countries over trade controls and restrictions to its markets.
Besides joining the Comesa FTA, more members of Comesa have relaxed visa regulations to boost cross-border trade.
Mauritius, Rwanda and Seychelles have scrapped visas for nationals of Comesa member states while Zambia has issued a circular waiving visas for the region’s citizens who travel for official business only.
The decisions are part of efforts to implement the bloc’s Protocol on Free Movement of Persons, Services, Labour and Rights of Establishment and Residence in the region. So far four countries; Burundi, Kenya, Rwanda and Zimbabwe have signed the protocol on free movement of persons. Only Burundi has fully ratified it.
Kenya and Rwanda are, however, already fully complying with most of the provisions of the protocol before it is fully implemented by the bloc. The two countries have promised to ratify the protocol soon.
