East Africa turns to tech to curb $6bn illicit trade

Lorries plying between Tanzania and Kenya are seen at the border town of Namanga. PHOTO | FILE

By  Josephine Christopher

Josephine Christopher is a business reporter for The Citizen and Mwananchi newspapers.

What you need to know:

• The plan, which was announced in Dar es Salaam on Wednesday by the East African Business Council, will also help to improve health and boost collection of government revenue across the region

Dar es Salaam. East Africa is expected to adopt a track-and-trace system to streamline cross-border trade and help stem nearly $6 billion in annual losses resulting from illicit trade.

The plan, which was announced in Dar es Salaam on Wednesday by the East African Business Council (EABC), will also help to improve health and boost collection of government revenue across the region.

EABC executive director John Bosco Kalisa revealed the plan during a regional workshop for stakeholders.

The workshop was organised to discuss and lay the foundation for the system.

Mr Kalisa said Wednesday’s discussions centred on a framework that will be used to create and operate the system.

“We plan to start as soon as possible. Digital tax stamps and electronic cargo tracking systems are among digital technologies governments have rolled out with a view to tracking trade within the East African Community region. However, these technologies are more focused on authentication and tax verification solutions rather than tracking and tracing,” he added.

Mr Kalisa said the EABC was also urging governments in the region to reduce costs associated with digital tax stamps (DTS) to enhance revenue collection and facilitate business operations.

“Tanzania’s recent reduction associated with DTS is appreciated. Similar measures are needed in other EAC member states. For instance, it costs $25.72 per 1,000 stamps in Kenya for tobacco products and this warrants a deeper regional system review.”

Industry and Trade deputy minister Exaud Kigahe said when opening the workshop that it is time the East African Community block considered the adoption of a common regional and interoperable track-and-trace solution to enable cross-border sharing of relevant data to stop illicit trade.

“According to a report by the World Customs Organisation (WCO), illicit trade accounts for approximately 3.3 percent of global trade. This represents a significant economic loss for governments and legitimate businesses,” he said.

Mr Kigahe commended the EABC and EAC for organising discussions on ways of combating illicit trade, noting that the workshop came at the right time when many countries worldwide are implementing various measures to curb illicit trade.

The East African Competition Authority deputy registrar (Monopolies and Cartels),  Ms Stellah Onyancha, said illicit trade, anti-competitive practices and consumer violations pose serious challenges, including counterfeiting, proliferation of contraband goods, piracy and intellectual property rights violations.

“These challenges erode trust, distort competition, drive away investors and worsen consumer welfare, thus jeopardising the integrity of our economies,” she said.

Ms Onyancha called for collective efforts by governments, businesses and consumers in fighting illicit trade and promoting fair competition in East Africa.

She said a regional track-and-trace system will harmonise tracking and documentation processes, reduce barriers and transaction costs, enhance competition, eliminate anti-competitive practices and ensure safety for both suppliers and consumers.

Some participants noted that once the system is up and running, it will promote sustainable development by attracting investment, stimulating growth and creating jobs in addition to promoting innovation and unlocking efficiency and transparency both on the part of governments and businesses.

The digital tracking system is also expected to empower consumers through detailed product information, thus enhancing confidence in authenticity and quality.