The costs of logistical and transport barriers to trade in East Africa

Briefing papers
May 2017
Michael Gasiorek, Maximiliano Mendez-Parra and Dirk Willenbockel

Since the establishment of the East African Community (EAC), comprising Burundi, Kenya, Rwanda, Tanzania and Uganda, the region has seen a steady strengthening of economic and political ties among the community's partner states. The EAC Customs Union came into force in 2005, facilitating the establishment of a common external tariff and paving the way for the removal of all intra-regional tariffs by 2010. Despite this, available trade statistics paint a mixed picture about the impact of the EAC on intra-regional trade. Although the establishment of the EAC coincided with an important expansion in intra-regional trade in absolute terms, overall intra-EAC exports did not grow as a share of the region's total exports. In addition, the persistence of non-tariff barriers (NTBs) still affects trade flows, and reduces the benefits to be gained from the regional integration process.

This fifth and final briefing of a project on NTBs in the EAC examines the cost of transport and logistical barriers to regional trade, calculating that they cost East African economies between 1.7% and 2.8% of gross domestic product every year. It then offers recommendations for policy-makers, suggesting that further trade liberalisation and improvements to infrastructure will reduce costs, in turn benefitting consumers by lowering prices.