Dar port holds key to transit trade

Talanta International researcher, former Trade Mark East Africa’s country director, Dr Josephat Kweka, has produced irrefutable evidence that transit trade benefits Tanzania to a great deal, but not without challenges.

In a research conducted early this year and which has become a public document following its publishing in the International Growth Centre blog, Dr Kweka states emphatically, “whether current economic policy in Tanzania supports transit trade is an empirical question we cannot address here.”

The study, which was funded by the International Growth Centre, under the commissioning of the Planning Commission, for the first time, clearly establishes, the benefits of transit trade for Tanzania.

The report pays tribute to this year’s budget vide: “One of the highlights of the Tanzanian 2017 budget speech was the abolishment of value added tax (VAT) on ancillary transit services. This move supports the belief among the people and business world in the country’s untapped growth potential in transit operations. Transit trade is vital in facilitating economic transformation and regional trade, offering multiple benefits to the surrounding society by unlocking the economic potential of those areas.

Whether or not the current economic policy in Tanzania supports transit trade is an empirical question that we cannot address here. Nonetheless, for the first time, a detailed study has been conducted to assess how and to what extent Tanzania benefits from facilitating transit trade for her landlocked neighbours (Zambia, Malawi, Eastern Democratic Republic of Congo, Burundi, Rwanda, and Uganda).”

The impact of transit trade has been interrogated well enough in this study to bring to the fore the fact that some businesses, more than others directly depend on transit trade.

Such businesses would come to a halt should the volume of transit trade fall. We have seen this recently. There are negative effects, for instance, in health. Because of interaction people are exposed to sexually transmitted diseases and the HIV/Aids pandemic.

The report, authored by Dr Kweka and supported by Solomon Michael, states that there is room for public policy to play an even bigger role in such areas as urban planning and even better trade data capture for improving the business environment.

In its recommendations, the study provides a compelling case for the indispensable role of the government in promoting transit trade as a potential growth driver.

Recommendations

Indeed, some actions are crucial to amplifying the benefits of transit trade for the economy. The government could:

i) accelerate urban planning in locations along the transit corridor to maximise the benefits of urbanisation in these areas,

ii) complement infrastructure investment with measures to improve efficiency of trade facilitation agencies; and

iii) promote policy research and data for informing dialogue, and monitoring performance.

One of the areas that should concern government is the Dar es Salaam Port. As we have seen recently, the amount of lethargy, theft and outright corruption that has been buried under the dredges of Dar Port are stories of the past.

Impromptu visits

More than twice in a week, President John Magufuli and Prime Minister Kassim Majaliwa have both been forced to make impromptu visits and read the riot act to port officials.

It is no secret that government wants to form another entity to manage the shipping business. The private sector is worried for selfish interests. The government seems determined to break the shoddy networks.

We refer severally to the Dar Port because there would be no transit business without it. More than two other presidents, if my memory serves me right, Joseph Kabila, Yoweri Museveni and Edgar Lungu, have also raised concerns about the shenanigans that happen at the Dar Port, causing inefficiency, and thus sending the Congolese, Zambian and even Burundi businesses to Beira or even Durban.

Dar Port is the key to transit business. But as long as dirty trade overrides the good intentions of government, it will be a while before the huge potential of transit trade is realised.