Traders question relevance of customs union

Tanzanians at a border point. The issue of work permit fees limits the movement of labour, goods and services. PHOTO BY Stephen WANDERA 

By Ismail Musa Ladu

Private sectors players have said there is no need for EAC governments to pursue the fully-fledged Customs Union since member states lack the readiness to adopt the process.

 Responding to a study aimed at informing the Ugandan negotiation team, Isa Ssekitto the Kampala City

Traders Association spokesperson, told Prosper that there is no justification for a single customs territory because it is unlikely to reduce the cost of doing business.

A single customs union is an integral component of the fully-fledged customs territory. It occurs where a number of independent countries merge their trade regimes to create a customs territory.

The attainment of the single customs territory is necessary for the further integration envisaged at the common market level.



“Traders are yet to see the benefits that the single customs territory will provide in terms of reducing trade barriers, or arbitrary decisions by member states or even reducing the demurrage costs,” said Mr Ssekitto.

He said: “As it stands now Mombasa Port belongs to the Kenyans and the Dar port belongs to the Tanzanian, there is nothing like joint ownership as we had earlier thought with the ushering in of the E. African integration.”

Speaking at the workshop to harness Uganda’s position on the single custom territory last week in Kampala,


Mr Kassim Omar, the chairperson of the Uganda Clearing and Forwarding Association, said the study conducted by MA consulting and Adam Smith International on the attainment of a single customs territory is detached from reality.

He said: “There are no options for some of our biggest challenges. The study does not show us to what extent has the cost of business reduced so far.”

The chairman of Uganda Sugarcane Technologists Association, Jim Mwine Kabeho said the single customs territory should be a project envisaged to be attained in the next 10 years.


“How can sugar be held for more than four months for unclear reasons at the customs department and you talk about a single customs territory?” he asked.

Unlike others, Merrian Ssebunya a respected business woman and a leader of several business association, said the single custom territory has the support but they need assurance that implementations of agreed positions will not be reduced to mere lip services.

Fina Bank Uganda marketing manager, Mr Bosco Gateja, said rising through the steps to be among the top eight in the market is also determined by the return on investment, which he said could be between two and six years.




Fina Bank is ranked at position 19th with an asset base of Shs89.5 billion ($35 million), a 1 per cent market share and seven branches.

Mr Gateja adds banks that bought out microfinance institutions like Equity Bank inherited wrong portfolios that resulted into bad debts, some of which had to be written-off yet they are also facing stiff competition at the same time.


He, however, said Fina plans to improve on its core banking system to better service delivery so as to improve its competitive edge in the market.

Although this newspaper failed to get a comment from Equity Bank Uganda because the officials declined to reply our questions, the parent company’s chief executive officer Mr James Mwangi, was last week quoted by Business Daily saying that the bank has shelved plans to open subsidiaries outside East Africa until its current foreign divisions start generating at least a quarter of its income.

“We want to pause a bit and look at our subsidiaries in the East Africa to help them contribute at least 25 per cent of revenue,” Mr Mwangi reportedly said.


He added: “There is need to consolidate our presence in those markets to match Kenya.”

This means that Equity Bank Uganda has not yet grown to generate even quarter of its parent company’s income.


The bank’s subsidiaries in Uganda, Tanzania, South Sudan and Rwanda together account for 13.5 per cent of the bank’s total income.

Equity Kenya had plans of establishing a pan-African bank by venturing into central, western and southern Africa markets.



Imperial Bank, another subsidiary from Kenya ranks 22nd with an asset base of $26 million, 0.5 per cent market share and 2 branches while NC is the newest entrant from Kenya has only one branch.

Although Kenyan banks have been aggressive to venture into regional markets, none of Uganda’s indigenous banks has physically moved to set up across the border.

Centenary bank for instance is present in South Sudan and Kenya through partnerships with South Sudan’s Ivory Bank and Kenya’s Cooperative Bank. The partnerships seek to promote commercial links as well as exchanging banking information and experience to facilitate trade.

Under the arrangements, traders are able to deposit money in Centenary Bank in Uganda and later withdraw it from Ivory Bank in South Sudan or Cooperative Bank I Kenya and vise-versa.

Centenary Bank managing director, Mr Fabian Kasi said partnering with the already established institutions in other markets is its strategy for now, adding that the bank will soon identify a partner in Rwanda and Tanzania for the same purpose.

Crane Bank has plans of expanding its footprint in Rwanda, the Democratic Republic of Congo and South Sudan and Mr A.R Kalan, the bank’s managing director said the institution has already gotten regulatory approvals from DRC’s Central Bank.