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Bribery A Challenge To East Africa Trade

by Lorys Charalambous, Tax-News.com, Cyprus

28 November 2012


A recent survey of five East African nations has reported that bribery as a non-tariff barrier to trade remains a significant challenge to the free flow of goods, labour, services and capital envisaged by the East African Common Market Protocol which came into force in 2010.

In Tanzania, the worst affected of the five countries, bribery costs per year amounted to about 18.6% of the total value of the goods transported. The other four countries in the survey, in descending order of the average amounts paid in bribes, were Kenya, Uganda, Rwanda and Burundi.

The survey conducted jointly by Transparency International and Trade Mark East Africa (TMEA) along the East African Community's main transport corridors, covered 1,731 respondents sampled across key players including drivers, clearing and forwarding agents, regulatory bodies, customs and police authorities. Almost all private sector players interviewed (drivers, transporters and clearing and forwarding agents) cited the likelihood of unnecessary delays as the major reason that prompts bribery payments.

The reasons for these delays ranged from excessive documentation to slow pace of services, and poor understanding of clearing procedures. Bribes were also used to avoid full verification of goods, paying full tax and other charges, and to avoid investigation especially on fraud attempts, contraband and illegal goods.

The report makes a number of recommendations to combat the practice, notably harmonization of custom codes, valuation standards and import clearance across the bloc to significantly reduce delays and lessen the necessity to pay bribes.

The executive director of Transparency International Kenya, Samuel Kimeu said: "Corruption serves as an unnecessary cost of doing business and as an additional burden to the consumer. Left unchecked, the vice will make this region uncompetitive."

TMEA's Lisa Karanja agreed: “Regional integration is gaining pace but existence of non-tariff barriers continues to be a deterrent in the full implementation of the various protocols. TMEA commissioned this study with a view to enhance the advocacy for the elimination of non-tariff barriers. We expect a comprehensive dialogue between state and non-state actors to address the key issue highlighted by this report. A resolution of the identified issue will lead to a more competitive business environment which will result in increased trade and ultimately prosperity for East Africans”.

TAGS: tax | business | tax avoidance | export duty | law | enforcement | Kenya | Rwanda | Uganda | exit tax | standards | regulation | trade | Burundi | Tanzania

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